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Guitar Center to Be Sold!!

Discussion in 'Miscellaneous [BG]' started by selowitch, Apr 7, 2014.

  1. selowitch


    Aug 6, 2005
    Rockville MD
    Read all about it.
    Ares Management LLC took a controlling stake in music-instruments retailer Guitar Center, part of a deal that converted some of the private-equity firm's debt in the retailer into equity, the retailer said.

    Bain Capital, Guitar Center's former owner, retained partial ownership of the company, along with representation on the board.

    The Wall Street Journal reported in late February that Ares and Bain Capital were in the final stages of hashing out a deal to swap the Guitar Center debt that Ares owns to equity. Ares had owned the majority of Guitar Center's debt.

    Guitar Center, a 250-store U.S. chain, had about $1.6 billion in debt, much of it stemming from Bain's $2.1 billion leveraged buyout of the company in 2007. The company was due to pay about $144 million in annual debt payments through 2016 and about $150 million total in 2017 and 2018, according to recent quarterly securities filing.

    Under the new deal, Guitar Center's total debt was reduced by about $500 million and its annual cash interest expense was cut by over $70 million. In addition to the debt-to-equity exchange between Ares and Bain Capital, Guitar Center said it completed a refinancing of its remaining debt at a lower interest rate and providing greater financial flexibility.

    Mike Pratt, the retailer's chief executive, said the deal will provide it with the resources to expand its footprint and invest in its business.

    Besides guitars, the retailer sells amplifiers, percussion instruments, keyboards and audio and recording equipment in stores and online. It also offers repair services and rents out rehearsal and lesson space in many stores.
  2. SunnBass

    SunnBass All these blankets saved my life.

    Aug 31, 2010
    Columbia, Mo
    Can't read the article in the link without a paid subscription.
    Thanks though.
  3. gearhead1972


    Feb 21, 2012
    Kent NY
    Try Here
  4. selowitch


    Aug 6, 2005
    Rockville MD
    Oops, sorry. I inserted the text of the story into my original post.
  5. mambo4


    Jun 9, 2006
  6. SunnBass

    SunnBass All these blankets saved my life.

    Aug 31, 2010
    Columbia, Mo
    Thanks guys.
  7. BurningSkies

    BurningSkies CRAZY BALDHEAD

    Feb 20, 2005
    Seweracuse, NY
    Old news.
  8. Kmonk


    Oct 18, 2012
    South Shore, Massachusetts
    Endorsing Artist: Fender, Spector, Ampeg, Curt Mangan Strings, Nordstrand Pickups, Korg Keyboards
    This has been in the works for quite a while and comes as no surprise. I honestly doubt that GC will be around in 5 years.
  9. I hope they will be! They're the only place around with anything near decent gear wise, and have some of the little accessories amd stuff I can't find other places.
  10. Jefff


    Aug 14, 2013
    I like small stores that concentrate on a particular area. I am lucky to live in an area that has many of these stores. If I want a quality acoustic guitar, there are a few places 30 min from me. If I want quality bass I can think of 4 places well within an hour.

    I haven't bought anything from GC since at least 1999....maybe earlier. I have been in one as recently as 3 months ago. I hated the vibe then, I hate it now.
  11. selowitch


    Aug 6, 2005
    Rockville MD
    Guitar Center is okay. I get annoyed at the indifference of the staff, the poorly set up instruments, and the widespread ignorance of product. It’s a nice resource but I prefer the single-site stores.
  12. letsrumble


    May 23, 2010
    From the snippet in the OP, it sounds like this gives GC some breathing room and makes it more likely that they will stay in business. I thought Ares would scrap the company and take what it could get.
  13. Maybe now would be a good time to do one of GC's 'No payment for 1 year" plans. Once they fold, vulture capitalists will swoop in and take pennies on the dollar.
  14. hrodbert696

    hrodbert696 Moderator Staff Member Supporting Member

    "Expand its footprint?" They're planning on opening MORE stores?
  15. Gord_oh

    Gord_oh Check out my items for sale in the classifieds! Supporting Member

    Oct 4, 2008
    Why not? GC owns a huge corner of the music market and just celebrated its 50th anniversary. Ares invested in a company because they are sticking around. Why would they dump money into something doomed to fail?

    Yes, I work for GC.
  16. Gord_oh

    Gord_oh Check out my items for sale in the classifieds! Supporting Member

    Oct 4, 2008
    For the past year they have been opening at least a store a month.
  17. Gord_oh

    Gord_oh Check out my items for sale in the classifieds! Supporting Member

    Oct 4, 2008
    That opinion is based on how many GC stores you have dealt with? Your one local one isnt enough. Our tech is constantly setting guitars up with pin point accuracy. IMO our staff is versed in some different opinion but the over goal is the same.
  18. Nashrakh


    Aug 16, 2008
    Hamburg, Germany
    +1. I'm an economist too, the analysis is correct but I think Garland is too optimistic about the 'every dollar is a vote' policy. And I have my doubts the TE group grasps the systemic logic of market mechanisms (though to be frank, that is more the domain of systems theory in sociology and nothing taught in economics courses). What we see at work here is business as usual, and without wanting to sound like a conspiracy theorist, there are enough people willing to make sure it stays that way (especially in a political landscape like the US which only knows two ballot options you'll be hard-pressed for a fundamental change in economic policy), as it has done for the past 300 years. Not like many people care enough to change it either way, so yeah.
  19. SirMjac28

    SirMjac28 Patiently Waiting For The Next British Invasion

    Aug 25, 2010
    The Great Midwest
    +1 my tech is at Guitar Center and he's one of the busiest in the area guy is an absolute phenom. I asked him why doesn't he have his own business he says because he doesn't have to pay any business expenses he makes decent money with benefits and he's building his customer base for free. I would like to see them succeed as I would any business that employs that many people most of whom live in the community that the store is in and how many mom and pops allow you thirty days no questions asked for returns on new and used items?