Guitar Center exits bankruptcy

Guitar Center Inc. has emerged from Chapter 11 bankruptcy protection, eliminating a big chunk of its debt in the process.

The musical instruments retailer, which filed for Chapter 11 in November, said it has concluded its fast-track reorganization, and emerged with a stronger balance sheet as a result of the elimination of nearly $800 million of debt and $165 million in new equity funding. 

In addition, Guitar Center said the recapitalization transactions boost its liquidity, supporting the company’s ongoing operations and enables it to invest in its strategic growth initiatives and execute its business plan.

 Guitar Center operates nearly 300 stores under its own banner and more than 200 Music & Arts stores, which specialize in band and orchestral instruments for sale and rental. It also operates Musician’s Friend, a direct marketer of musical instruments. As previously reported, Guitar Center has hired A&G to explore opportunities to “optimize” its real estate portfolio. 

“We are excited to have gained the financial and operational flexibility we need to reinvest in our business and support our long-term sustainable growth, allowing us to deliver on our mission of putting more music into the world,” said Ron Japinga, CEO, Guitar Center. “We look forward to strengthening our business and to building upon this momentum as we enter this next exciting chapter.” 

Guitar Center pre-negotiated a restructuring support agreement which included new financing from existing creditors, plus $165 million in new equity from owner Ares Management Corp., along with Carlyle Group and Brigade Capital Management.