Guitar Center signs restructuring deal to reduce debt by $ 800 million

Guitar Center Inc, America’s largest retailer of musical instruments and equipment, has entered into a restructuring deal with key stakeholders that includes nearly $ 800 million in debt reduction, the company said in a statement.

The retailer has signed the Restructuring Support Agreement (RSA) with its equity sponsor, a fund managed by private equity firm Ares Management LP, new investors Brigade Capital Management and a fund managed by Carlyle Group, as well as supermajorities of its groups of note holders.

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The deal includes new equity investments of up to $ 165 million to recapitalize the company, the retailer said.

The company plans to file voluntary post-Chapter 11 reorganization petitions in the U.S. bankruptcy court to execute the prepackaged financial restructuring plan, the statement said.

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Guitar Center, which has nearly 300 stores across the country, said business operations will continue uninterrupted under the deal.

In 2017, the company said it was exploring ways to restructure its $ 1.3 billion debt as music fans shifted their shopping online.

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Guitar Center started in 1959 as a home organ store in Hollywood.

(Reporting by Aishwarya Nair in Bengaluru; editing by Kim Coghill)