Officials with Guitar Center, with an outlet on East Colorado Boulevard in Pasadena, said Friday the company has reached a restructuring deal with its controlling owner, a fund managed by private equity firm Ares Management.
The company, which like other non-essential businesses was forced to close due to the COVID-19 pandemic, said it expects to be out of bankruptcy by the end of the year.
Not only would the deal with Ares cut $800 million in debt and add $375 million in debtor-in-possession financing, but the company would also raise $335 million in new senior secured notes that would give it additional liquidity.
Included in the deal as new equity investors are Brigade Capital Management and The Carlyle Group, along with bondholders.
The company said it is “pleased with its overall store footprint,” which includes nearly 300 Guitar Center stores and more than 200 Music & Arts stores.
The Guitar Center outlet in Pasadena is located at 2660 E. Colorado Blvd.
The company has hired a real estate firm “to explore opportunities to optimize its real estate portfolio and other agreements to focus on investments that best position the company to return to its growth trajectory prior to COVID-19.”
According to a statement issued by the company, the deal would put Guitar Center”back on the track for growth it was on before COVID-19.”
“With 10 consecutive quarters of growth prior to the impact from COVID-19, we have been pleased with our resilient financial performance during these challenging times created by the pandemic,” Guitar Center CEO Ron Japinga said in the statement. He added that post-Chapter 11 the retailer “will be better equipped to execute on and invest in our strategic growth initiatives.”
“This agreement will allow us to significantly reduce our debt and reinvest in our business in order to better serve our customers and deliver on our mission of putting more music in the world,” Japinga said in the statement.