BANKRUPTCY COURT APPROVES MERRY-GO-ROUND ENTERPRISES MANAGEMENT AGREEMENT WITH MERIDIAN VENTURES' SHULL AND KENNEY; New Management Team Receives Unanimous Support; Announces Intention to File Consensual Plan of Reorganization by Mid-February.

JOPPA, Md.--(BUSINESS WIRE)--January 5, 1995--Merry-Go-Round Enterprises, Inc. (NYSE:MGR) today announced that it received Federal Bankruptcy Court approval of its proposed management agreement with Meridian Ventures, Inc. As previously announced, MGRE has hired Meridian, the Hilton Head, South Carolina turnaround consulting firm, to lead the Company in its efforts to emerge from Chapter 11. The management agreement calls for Meridian's Thomas Shull to assume the post of President and CEO of MGRE, and appoints James Kenney as the Company's Executive Vice President and COO.

The consent motion filed by the Company was unanimously supported in court today by MGRE's official creditors' and equity committees, as well as its major creditors, including Fidelity Management & Research Company. MGRE's new management also said in court today that it intended to file its own plan of reorganization by mid-February, according to consensual terms proposed last week by its various stakeholders.

Isaac Kaufman, MGRE's long-time Chief Financial Officer, concurred, saying, "Tom and Jim have put in motion all of the necessary but difficult decisions for MGRE to turn the corner financially, and everyone at the Company is thrilled that we now have the framework of a plan in place which will take us out from under the cloud of Chapter 11 sooner rather than later."

The outline for a consensual plan of reorganization which was put forth by the Company and its stakeholders provides for unsecured creditors claims, estimated at $225 million, to be settled through a combination of $130 million in cash and debt securities and 75% of the reorganized Company's stock. Under the proposal, current shareholders would receive 25% of the new shares in reorganized MGRE. Mr. Shull added, "We are pleased with developments today and over the past week. Our employment issues are now settled, and we appear to have a consensual agreement among all stakeholders. This will put our turnaround initiatives on a fast-track, and we have established an aggressive time table for confirmation of a reorganization plan as early as this summer."

Shull continued, "Furthermore, it is extremely encouraging to us that we have the full support of not only our stakeholders but the entire MGRE management team as well, which is why Jim and I were joined in the court hearing today by the senior management team. We still have much work to do, and it is essential that we move forward with a strong team in order to accomplish our goals."

Meridian's management agreement is based on an initial term of six months, and will continue thereafter on a month-to-month basis with the mutual consent of the various parties involved.

Frank Tworecke, President of the Company's Merry-Go-Round and Cignal divisions, commented on today's progress in court, "For those MGRE employees who have worked hard over the last twelve months to strengthen our core businesses, we can now see a light at the end of the tunnel and, with Shull and Kenney removing the burden of the Chapter 11 process and the operational initiatives, our merchants can focus on further merchandising improvements and our efforts to recapture our customer base."

Merry-Go-Round Enterprises, Inc. is a specialty apparel chain selling contemporary fashions for young men and women.

CONTACT: MWW/Strategic Communications, Inc.

              Public Relations - Tel. - 201-507-9500
              Contact: Michael W. Kempner / Michael T. Lennon