PARTNERSHIP TO MAINTAIN TEMPO.

Byline: Jesse Hiestand Staff Writer

SIMI VALLEY - Video and music distributor Tempo One-Stop Records Inc. said Friday that it has found a partner to help it emerge from Chapter 11 bankruptcy.

One of the nation's largest distributors, the company that does business as Pacific Coast One-Stop has negotiated the deal with Universal Capital Partners LLC, a Minneapolis-based retail consulting and liquidation firm.

``We have been absolutely challenged in the last few months,'' said Pacific Coast Chairman and Chief Executive Ralph W. Johnson. ``The bankruptcy was filed in order to protect the assets of the company so we can reorganize and move forward with an accurate statement of assets and liabilities.''

According to Johnson, the company was forced to suspend operations and lay off its 125 employees in April when Coast Business Credit cut off funding over accounting concerns.

Johnson, a Sacramento investment banker who bought the company in December in an asset sale, said he discovered during due diligence that assets, receivables and inventory had allegedly been overstated by the seller.

Johnson said he has sued the seller, who could not be reached for comment, and was forced to close down when the lender got a restraining order against Pacific Coast.

An attorney for Coast Business Credit said she could not comment on the case.

Johnson said the lender gave him a 30-day loan to draw up a reorganization plan and find an equity investor to replace Coast Business Credit, a division of Southern Pacific Bank.

``We will be evaluating every aspect of Pacific Coast's operations, from its inventory base to its business model and will make recommendations to the board of directors regarding the future direction of the company,'' said Michael Catain, president and chief executive of Universal Capital Partners.

As part of the arrangement, Catain has been appointed to the board of directors of Pacific Coast.

In the meantime, the company has $10 million in inventory it cannot sell out of its 60,000-square-foot warehouse.

It hopes to hire back all employees. Some 35 workers are donating their time in an effort to save the company, Johnson said.

Pacific Coast has clients at more than 2,500 retailers in the United States and 500 internationally, offering music titles from 4,800 major and independent record labels, plus 6,000 DVD titles.