Latest on Rowe International

St. Louis company has coins to keep Rowe's music playing


Friday, October 31, 2003

By Julia Bauer
The Grand Rapids Press




Rowe International will survive to play another day, after a St. Louis
acquisition company agreed to pay $3.8 million cash toward a deal valued at
$12.7 million for the bankrupt jukebox manufacturer.
The company is expected to stay open in Grand Rapids and its 162 employees
will get a chance to reapply for their jobs through Harbour Group, the new
owner.

The total sale price includes $8.9 million for the value of the company's
available cash and inventory at closing, set for Nov. 11.

Bankruptcy Judge Jeffrey R. Hughes approved Rowe's purchase by Harbour Group
on Thursday, one day after an intense auction that went 10 rounds with
stalking horse bidder Alexander Enterprises.

In August, Alexander had agreed to buy Rowe for a base price of $10 million
when Rowe filed for Chapter 11. As a stalking horse bidder, Alexander set a
fair starting price for the troubled company.

But when auction day came, Harbour Group was the survivor. The action took 1
1/2 hours in the Grand Rapids law office of Rowe attorney Thomas Sarb.

Rowe's 162 employees will be getting letters and fresh job applications from
their new owner as soon as next week, said Jeff Fox, Harbour president and
chief operating officer.

Alexander also had sought applications in a pre-emptive move earlier this
month, but those will apparently be useless now.

The sale only includes tangible property, including machinery and patents.
Local management will select who gets rehired, Fox said.

Rowe's top executives, including J. Douglas Johnson, chairman and chief
executive officer, and George Pinos, vice president of finance, will keep
their jobs.

"Rowe has a great management team," Fox said, nodding toward Johnson and
Pinos. "These guys have done an excellent job through a very, very difficult
time."

The 95-year-old company has offices at 1500 Union Ave. SE and its plant is
next door at 540 Crofton St. SE.

Union representatives for Local 981 of the International Union of
Electronics/Communications Workers of America attended the bankruptcy
hearing Thursday.

Jim Ranazzi, president of Local 981, said Johnson met with employees after
the sale won approval.

"A lot of people still are real nervous," Ranazzi said. "I guess until they
come and talk formally with the union, we won't know the plan."

If Rowe chooses to rehire more than 50 percent of its hourly unionized
employees, the UFCW would represent the plant and would need to negotiate a
totally new contract.

Johnson would not say how many people he will need to run the plant under
the new ownership.

Proceeds from the sale will pay pennies on the dollar for Rowe's lenders.
The company has 1,100 creditors, with $78.8 million in bank loans. Unsecured
creditors, who are owed more than $64 million according to court documents,
will receive $800,000 in the settlement.

Rowe's 645 retirees also will lose their health and life insurance coverage
next month and will have their pensions assumed by the federal Pension
Benefit Guaranty Corp. Many of Rowe's retirees live near its former location
in New Jersey and a smaller plant in Texas.

The sale comes ahead of the final bankruptcy process, a reorganization plan
Sarb said would be filed within 30 to 60 days.

Sarb said he is also prepared to file for Chapter 7 liquidation if the sale
falls through, because the company is running out of cash.

Johnson, who was visibly relieved after the sale won approval, said he
looked forward to being without "the burdening debt of the last 13 years,"
when the company's owners entered highly leveraged deals to buy the
business.

Sam Hamacher, executive vice president of Harbour Group, said his company
would invest $3 million to $5 million in Rowe, to beef up its research and
development for an Internet-linked jukebox.

Harbour Group owns 140 companies, most acquired in complementary product
categories, Hamacher said.

Thanks for the update. Kinda cool they may make it a while longer. If
they really want to stick it out the need to get the cost of the product
down.

--
Ken In Texas
http://www.pinballrebel.com
Custom Pinball Cards, Jukeboxes, Drive In's

"Never ask a man if he's from Texas.
If he is, he'll tell you on his own.
If he ain't, no need to embarrass him."

On Sun, 02 Nov 2003 13:08:01 GMT, "The G Man"
wrote:

St. Louis company has coins to keep Rowe's music playing


Friday, October 31, 2003

By Julia Bauer
The Grand Rapids Press




Rowe International will survive to play another day, after a St. Louis
acquisition company agreed to pay $3.8 million cash toward a deal valued at
$12.7 million for the bankrupt jukebox manufacturer.
The company is expected to stay open in Grand Rapids and its 162 employees
will get a chance to reapply for their jobs through Harbour Group, the new
owner.



Its very good news that this is happening and that it looks like they
will be around for some time yet. There isnt really a viable
alternative to the Rowe jukebox in my opinion as an operator.

I do think that they need a workable model now for digital jukeboxes.
Current systems simply do not work for operators and will not work -
as they remove their independence. I don't know about the US but in
most cases the internet for music delivery isnt viable

1. The cost of phone line or ADSL rental to provide an internet
service to each location is too much compared to earnings.

2. On most internet plans plans - there are download limits - that
would be used up within hours of the juke being connected in an
average earning location

3. What happens to the music if the internet link is lost or congested
?

4. Most operators aren't going to acceptt a system where their
location is connected to someone elses database - and them knowing all
their business, and having control of what they can and cant have -
and dictating the cost and terms, and the power to pull the plug on
the music at any time

The only viable way to run such a system at present is for the
operator to buy the digital music / video on CD Rom / DVD rom and load
it into each juke - a digital version of the system that we currently
have now. It's quite viable for the Juke to store on an internal hard
drive all the music it will ever need to have - currently 300gig hard
drives are readily availible - more than enough enough to store 500
Video CD albums or 5,000 MP3 ALBUMS. (Probably more when you take
into account most CDs wouldn't be completely full up to the 80 min
recording time)

I think you will find that if Rowe (or any other manufacturer) ignores
these issues - and comes up with the unworkable setups that we have
already heard plently about - it will only be a short time before they
are back in bankruptcy again.

In fact - it would be very interesting to speculate how long it will
be before its viable to store every recorded song ever released on a
readily available hard drive. I don't think it will be that far away

The G Man wrote:

Big snip

Rowe's top executives, including J. Douglas Johnson, chairman and chief
executive officer, and George Pinos, vice president of finance, will keep
their jobs.

That's real smart. Keep the guys who mismanaged the company and let the
low level employees attempt to get rehired.


"Rowe has a great management team," Fox said, nodding toward Johnson and
Pinos. "These guys have done an excellent job through a very, very difficult
time."

I supposed they feel that driving a company to bankruptcy is an
"excellent job". ?????????????

Strange things happen in big business.

--
Tony

Thank you for your comments Tony. It's very refreshing knowing I'm not
the only one with these views! As I read the original post, I just
simply couldn't believe what I was reading! In most any other business
bankruptcy, the management team are the FIRST ones to be let go!
Common logic dictates that if the "management team" is doing a good
job, then costs are being controlled, etc., and the company will not
being operated at a loss... Originally I had high hopes for Rowe
surving, but with this strategy, they are doomed for failure again. At
least I have lots of parts to keep my old Rowes running...

Thomas


Tony Miklos wrote in message . ..
Big snip

Rowe's top executives, including J. Douglas Johnson, chairman and chief
executive officer, and George Pinos, vice president of finance, will keep
their jobs.

That's real smart. Keep the guys who mismanaged the company and let the
low level employees attempt to get rehired.
"Rowe has a great management team," Fox said, nodding toward Johnson and
Pinos. "These guys have done an excellent job through a very, very difficult
time."

I supposed they feel that driving a company to bankruptcy is an
"excellent job". ?????????????

Strange things happen in big business.