Guitar Center Inc. is close to emerging from bankruptcy.
The musical instrument retailer’s restructuring plan has been approved by a bankruptcy court. Guitar Center, which filed for Chapter 11 in November, said it expects to emerge from Chapter 11 by Dec. 31, with significantly reduced debt.
Upon exiting bankruptcy, the retailer is expecting to operate with a strengthened capital structure that will eliminate more than $800 million of existing debt.
“This approval represents a momentous and positive milestone in our long-term strategy,” stated Ron Japinga, CEO, Guitar Center. “With our strengthened financial position, we will continue to reinvest and grow our business. We are nearing the end of a successful holiday season and I am excited about our bright future.”
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.
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, serving teachers, band directors, college professors and students. It also operates Musician’s Friend, a leading direct marketer of musical instruments in the United States. As previously reported, Guitar Center has hired A&G to explore opportunities to “optimize” its real estate portfolio.