Guitar Center Inc.’s indirect wholly owned subsidiary, Guitar Center Escrow Issuer II Inc., has priced $350 million in aggregate principal amount of 8.5-percent senior secured notes due 2026 at an issue price of 100 percent. The aggregate principal amount of notes to be issued in the offering was increased to $350 million from the previously announced $335 million. The notes offering is expected to close on Dec. 15, subject to customary closing conditions and certain other conditions.
The offering is part of a series of transactions, including exit financing transactions, being undertaken in connection with the financial restructuring of the company and certain of its subsidiaries to be effectuated through a pre-packaged plan of reorganization under Chapter 11 of the U.S. Bankruptcy Code as filed with the U.S. Bankruptcy Court for the Eastern District of Virginia on Nov. 21, 2020. On and following the Escrow Release Date, the net proceeds from this offering, together with other cash proceeds from the other Restructuring Transactions, will be used to repay all amounts outstanding, if any, under a secured asset based debtor-in-possession facility and a secured debtor-in-possession term facility; to repay its senior secured superpriority notes due 2022; to pay the cash portion of the consideration holders of the company’s 9.5-percent senior secured notes due 2021 will receive in settlement of their claims; to pay related fees, interest and expenses incurred (if not previously paid) in connection with the Restructuring Transactions and the proceedings under Chapter 11 of the U.S. Bankruptcy Code; and for general corporate purposes.
For more news from the Music & Sound Retailer, click here.