Guitar Center finalises refinance


Our good friend Brian Majeski of the Music Trades magazine has reported that Guitar Center’s new bond issue extends the payment date by three years…

Guitar Center has allayed default concerns with a recently completed bond exchange that adds three years to the maturity date on $325 million in debt. Under the exchange offer, bondholders can swap $325 million in senior unsecured bonds due in 2019 for new bonds that mature in 2022. As of March 23, 97% of the outstanding bond holders agreed to the exchange. Separately, Moody’s Investors Service reports that Guitar Center is planning to issue new $635 million senior secured notes with a 2021 maturity date, and extend the due date of $375 million in asset backed loans to 2022, from 2019.

A Moody’s analyst described the bond swap as a “distressed exchange,” and said it would add approximately $50 million to the retailer’s total debt burden. However, by extending the maturity date, he added that “it will alleviate concern regarding Guitar Center’s significant and near term debt maturities and provide some increased financial flexibility.” Moody’s remains concerned about Guitar Center’s credit worthiness, due to what it terms the company’s “limited revenue visibility.”