http://www.reuters.com/article/2013/06/12/buyouts-bain-guitarcenter-idUSL2N0EO24720130612
NEW YORK, June 12 (Reuters-BUYOUTS)-Standard & Poor's cut its debt rating on Bain Capital-owned Guitar Center Holdings Inc late last month, as the music retailer purchased during the height of the 2007 buyout boom struggles with "weak operating trends." The corporate credit rating on the Westlake Village, Calif.-based company dropped to 'CCC+' from 'B-'.
"Although we anticipate the company (will) obtain the amendment to its financial covenants, we believe its capital structure is unsustainable in the long term and the company is dependent upon favorable business, financial, and economic conditions to meet its financial commitments," S&P credit analyst Mariola Borysiak said in a recent note to clients.
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The company operates 253 stores under the Guitar Center brand, 117 stores under the Music & Arts brand, and also owns Musician's Friend, a retailer that targets serious musicians and hobbyists.
Guitar Center is a retailer worth salvaging, said the industry source, who asked not to be named. The source said the retailer sells products and services unavailable online.
For example,
musicians need extra customer service. They also desire to play and interact with instruments before purchasing them -- something that Guitar Center offers. The company may need to shrink in size, the source said, but it still has a place in the world and is a relevant retailer.