Guitar Center Announces Court Approval of Restructuring Plan

Company continues to help customers make music and expects to emerge from Chapter 11 by December 31, 2020

The plan will significantly reduce debt, positioning the Company for future growth

Guitar Center, Inc. (“Guitar Center” or the “Company”), the world’s leading musical instrument retailer, announced today that the United States Bankruptcy Court for the Eastern District of Virginia has confirmed the Company’s Plan of Reorganization (the “Plan”). As planned, the Company expects to emerge from Chapter 11 by December 31 with significantly reduced debt once customary conditions have been finalized.

Ron Japinga, CEO of Guitar Center, said: “This approval represents a momentous and positive milestone in our long-term strategy. Throughout this process, we have continued to serve our customers in-store and online, helping even more people make music during these unique times. I am grateful for our customers, associates, vendors and other partners for their unwavering support throughout this process. With our strengthened financial position, we will continue to reinvest and grow our business. We are nearing the end of a successful holiday season and I am excited about our bright future.”

Upon emergence, the Company is expecting to operate with a strengthened capital structure that will eliminate more than $800 million of existing debt. In connection with the Plan, the Company raised $350 million in new senior secured notes. In addition, several banks led by Wells Fargo and JPMorgan are expected to fund a new $375 million secured asset based financing facility, which would provide significant additional liquidity for the business. The new asset based financing facility, new senior secured notes and $165 million in new equity investments from a fund managed by Ares Management Corporation, funds managed by Brigade Capital Management and a fund managed by The Carlyle Group, are expected to provide the Company with the capital required to support ongoing operations, invest in its strategic growth initiatives and execute its business plan.

Court filings and information about the claims process are available at www.cases.primeclerk.com/GuitarCenter, and by calling the Company’s claims agent, Prime Clerk, toll-free 877-471-3505; Local/International: 347-919-5770 or by sending an email to guitarcenterinfo@primeclerk.com.

Milbank LLP is serving as legal counsel to the Company. Houlihan Lokey is serving as the Company’s financial advisor. BRG is serving as the Company’s restructuring advisor.

Stroock & Stroock & Lavan LLP is serving as legal counsel to an ad hoc group of Secured Noteholders and Province is serving as financial advisor.

Kirkland & Ellis LLP is serving as legal counsel to Ares Management Corporation.

Debevoise & Plimpton LLP is serving as legal counsel to Brigade Capital Management and GLC Advisors & Co. is serving as financial advisor.

Paul, Weiss, Rifkind, Wharton & Garrison LLP is serving as legal counsel to The Carlyle Group.

About Guitar Center:

Guitar Center is a leading retailer of musical instruments, lessons, repairs and rentals in the U.S. With nearly 300 stores across the U.S. and one of the top direct sales websites in the industry, Guitar Center has helped people make music for more than 50 years. Guitar Center also provides customers with various musician-based services, including Guitar Center Lessons, where musicians of all ages and skill levels can learn to play a variety of instruments in many music genres; GC Repairs, an on-site maintenance and repairs service; and GC Rentals, a program offering easy rentals of instruments and other sound reinforcement gear. Additionally, Guitar Center’s sister brands include Music & Arts, which operates more than 200 stores specializing in band & orchestral instruments for sale and rental, serving teachers, band directors, college professors and students, and Musician’s Friend, a leading direct marketer of musical instruments in the United States.

GUITAR CENTER, INC.

Contacts

Media Contacts

Ira Gorsky
ira.gorsky@edelman.com
(732) 740-5872

Jordan Fisher
jordan.fisher@edelman.com
(573) 470-1803