Guitar Center Files for Bankruptcy, Plans to Keep Stores Open

Musical instrument retailer Guitar Center filed for Chapter 11 bankruptcy protection on November 15. This marks the latest financial trouble for the company.

Guitar Center plans to pursue a restarting support agreement, striking a deal with its key investors and lenders. The RSA intends to reduce the company’s reported $1.3 billion debt, by nearly $800 million. Private equity group Ares Management Corporation, the main controlling owner of Guitar Center, will provide up to $165 million in new equity. The company has also incorporated new investor Brigade Capital Management, a fund managed by The Carlyle Group, and other lenders.

Additionally, Guitar Center will receive $375 million in debtor-in-possession financing. It also plans to raise $335 million in new senior secured notes. G...

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