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Business News (more headlines) 02-15-2005

DMX MUSIC Announces Definitive Agreement For Asset Sale With THP Capstar, Inc.

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DMX MUSIC, Inc., a global leader in delivering integrated audio and visual media solutions to 100 million daily listeners in homes, airlines and businesses around the world, announced it has signed an Asset Purchase Agreement for the sale of all of DMX MUSIC's domestic and international operations with THP Capstar, Inc.

THP Capstar, Inc. is an affiliate of Capstar Partners, LLC, a private investment company led by Steve Hicks with a focus on traditional and early stage investments in broadcast/media, distributed content and media technology. Partnering with Capstar in THP Capstar, Inc. is Trinity Hunt Partners, a Dallas-based, regionally-focused private equity firm specializing in investments in established middle market companies in the media, manufacturing, business services, healthcare and consumer products industries. Silver Point Finance, LLC is providing debt financing for the transaction.

As required under the purchase agreement and to facilitate the sale, DMX MUSIC's domestic companies have voluntarily filed petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code today. These filings only involve DMX MUSIC's U.S. operations. The filing does not include its subsidiaries in Australia, Belgium, Canada, The Czech Republic, France, Germany, Holland, Hungary, Poland, Spain, Japan or the United Kingdom.

"This transaction represents very positive news for our customers, employees, affiliates and other constituents," said Mark D. Rozells, President and Chief Executive Officer of DMX MUSIC. "Completing the sale through a Chapter 11 filing will allow us to significantly reduce our debt and undertake an orderly transition to our new owners. Under THP Capstar's ownership, the business will be able to capitalize on its leading market position, proprietary technology and significant operational improvements made since 2002, while having greater access to financial resources necessary to support our future growth."

Mr. Rozells noted that the Chapter 11 and sale processes will have no impact on the Company's ability to fulfill its obligations to its customers and employees. "During the sale process, we will continue our commitment to provide the premier music, messaging and imaging services, audio/video systems, and client support that our customers have come to expect. Our daily operations will continue as usual, our vendors will be paid for all supplies furnished and services rendered subsequent to the filing, and all day-to-day aspects of the business will continue without interruption. Taking care of our customers is, and will remain, our number one priority."

New Financing Secured

DMX MUSIC also announced it has received a commitment for up to $10 million in debtor-in-possession (DIP) financing from its current bank group led by Royal Bank of Canada, subject to court approval. The DIP financing will be used to maintain uninterrupted service and delivery to DMX MUSIC customers during the completion of the sale transaction, and to ensure payment to vendors for post-petition purchases in the ordinary course of business.

"With our positive free cash flow, DIP financing, and the protections provided under the Bankruptcy Code for post-petition purchases, we are confident our suppliers will continue their long-term support of us while we complete the sale. Throughout the sale process and beyond, we will continue to service our existing customers, renew current agreements and acquire new business," Mr. Rozells said.

"Today's action lays the foundation for DMX MUSIC's future growth by creating a capital structure that will enable DMX MUSIC to maintain a dominant market presence for many years to come," stated Mr. Rozells.

In conjunction with the filing and pursuant to Section 363 of the Bankruptcy Code, DMX MUSIC also filed a motion for the establishment of bidding procedures to allow other qualified bidders to submit higher and better offers to purchase the assets being sold. The Company anticipates the sale transaction will be completed within 60 to 90 days.

DMX MUSIC filed its voluntary petitions for reorganization in the United States District Court for the District of Delaware in Wilmington. The filing entities are Maxide Acquisition Inc.; AEI Music Network, Inc.; Tempo Sound, Inc.; and DMX Music.

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