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Napster closes in on buyer

The former high-flying music-trading site says it has signed a nonbinding letter of intent to sell its assets, although it declined to name the buyer.

Napster, the former high-flying music-trading site, said Friday that it has signed a nonbinding letter of intent to sell its assets, although it declined to name the buyer.

Rick Antonoff, an attorney representing Napster's unsecured creditors committee, said that after negotiating with a select group of qualified bidders in recent days, it has signed an agreement with one company, which he would not name, and that a deal could be reached as soon as next week.

In addition, Antonoff said that on Monday the court is expected to authorize the U.S. trustee to appoint a responsible officer for Napster, helping to restore its designation as a company in Chapter 11 and avoid Chapter 7 liquidation.

"The upshot of it is, through negotiations over the past week, we came to agreement with the U.S trustee where we the committee and the debtor would agree to appoint of a Chapter 11 trustee," Antonoff said. "This solves the corporate governance issue and allows it to remain in Chapter 11, where we think we'll get a higher recovery for the assets."

Earlier this month, Napster received a $2.4 million bid from Private Media Group, an adult-entertainment company, which sought to acquire Napster's Web address and trademarks to create a file-sharing service for adult films.

Antonoff said that Private Media Group's offer did not enter in the running for the most qualified bidders, but that the company is still in negotiations with prospective buyers pending the closure of the deal announced Friday.