Investor Joins Trans World CEO in Offer

Riley Investment Management LLC has agreed to jointly offer $5 per share to acquire Trans World Entertainment Corp. with Trans World Chief Executive Robert J. Higgins, according to a Securities and Exchange Commission filing Wednesday.

Bryant Riley, who controls Riley Investment Management, owns an 11.9 percent stake in the music and video retailer.

On Nov. 9, Trans World said it received a nonbinding proposal from Higgins to buy all the shares he doesn't already own for $5 each. Higgins currently holds about 40 percent of the company's outstanding stock.

At the time, Higgins said he had approached Riley to participate in the acquisition deal, which is subject to the CEO securing financing.

Under the nonbinding agreement signed on Wednesday, Higgins and Riley agreed to form a new vehicle, Venture LLC, to make a formal bid for the company.

Higgins is expected to contribute at least 12 million shares of Trans World common stock to Venture. Riley will contribute at least 3.5 million shares but no more than 5.5 million to the vehicle.

The agreement also stipulates that Higgins may continue with the acquisition without Riley's participation.

Last week, Trans World said its special committee consented to Riley's participation in the deal.

HIggins' offer has already come under criticism by at least one shareholder. In a letter to Higgins released on Nov. 16, Sherwood Investments Overseas Ltd. said the $5 per share offer is "grossly inadequate."

Sherwood, which holds a 4.3 percent stake in Trans World, asked the specialty retailer to seek competing bids and said an auction would be likely to result in an offer higher than $8 per share.

Trans World shares gained 2 cents to $4.98 in afternoon trading.