A fund managed by the Private Equity Group of Ares, a fund managed by The Carlyle Group and funds managed by Brigade Capital Management supported Guitar Center’s Chapter 11 filing with $165 million in new equity investments.
The company’s restructuring plan will reduce debt by nearly $800 million and provides for a comprehensive transaction that will deleverage the company’s balance sheet, enhance financial flexibility and provide additional liquidity to continue to support its vendors, suppliers, and employees.
“This is an important and positive step in our process to significantly reduce our debt and enhance our ability to reinvest in our business to support long-term growth. Throughout this process, we will continue to serve our customers and deliver on our mission of putting more music in the world. Given the strong level of support from our lenders and creditors, we expect to complete the process before the end of this year,” Ron Japinga, CEO of Guitar Center, said.
Guitar Center has negotiated to have a total of $375 million in DIP financing provided by certain of its existing noteholders and ABL lenders. In connection with the plan, the company currently intends to raise $335 million in new senior secured notes. UBS Investment Bank will serve as the lead placement agent in connection with this effort.
Milbank is serving as legal counsel to the company and BRG is serving as restructuring advisor. Houlihan Lokey is serving as the company’s financial advisor.
Stroock & Stroock & Lavan is serving as legal counsel to an ad hoc group of Secured Noteholders and Province is serving as financial advisor.
Kirkland & Ellis is serving as legal counsel to Ares Management Corporation.
Debevoise & Plimpton is serving as legal counsel to Brigade Capital Management and GLC Advisors & Co. is serving as financial advisor.
Paul, Weiss, Rifkind, Wharton & Garrison is serving as legal counsel to The Carlyle Group.
Guitar Center is a retailer of musical instruments, lessons, repairs and rentals in the U.S.
