Private capital firms lend a hand to music retailer Guitar Center
Guitar Center’s Chapter 11 filing made news over the weekend, and tucked into the announcement was the fact that multiple firms have come to the rescue by providing $165 million in equity investments and additional aid in reducing the company’s debt.
A fund managed by Ares Management is one of Guitar Center’s backers in a plan formed in mid-November. New investors in the musical instrument retailer interestingly include hedge fund firm Brigade Capital and a private equity fund managed by Carlyle Group.
The plan allows Guitar Center to deleverage its balance sheet, shedding $800 million in debt. It also allows for additional liquidity to continue to support vendors, suppliers and employees.
According to the company announcement, Guitar Center has negotiated to have a total of $375 million in Debtor-In-Possession 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.
New York-based $27 billion hedge fund firm Brigade manages various credit investment strategies, including long/short credit, opportunistic credit, structured credit, distressed debt, traditional high yield and long/short equity.
CEO of Guitar Center, Ron Japinga, said that the process allows the company to continue to serve its customers. “Given the strong level of support from our lenders and creditors, we expect to complete the process before the end of this year,” Japinga said in a statement.
