Guitar Center gets interim approval of $375 million DIP loan package

By Sarah Lizee

Olympia, Wash., Nov. 24 – Guitar Center, Inc. received approval to access a $325 million senior secured super-priority priming debtor-in-possession term loan and a $50 million asset-based DIP facility on an interim basis, according to an order filed Monday in the U.S. Bankruptcy Court for the Eastern District of Virginia.

A final hearing is scheduled for Dec. 17.

As previously reported, Delaware Trust Co. is the administrative and collateral agent for the DIP term loan, and Wells Fargo Bank, NA is the administrative and collateral agent for the ABL DIP facility.

The company said it is seeking full access to the facilities following an interim order to avoid immediate and irreparable harm.

The facilities will mature on the earliest of one year after the petition date, 45 days after the petition date if the final order has not been entered, the effective date of a plan, the consummation of a sale of all or substantially all of the debtors’ assets, the date of termination of the commitments and the acceleration of any outstanding loans, and dismissal or conversion of the cases.

The term loan will bear interest at 7% per year, while the ABL will bear interest at Libor plus 275 basis points.

The musical instrument retailer is based in Westlake Village, Calif. The company filed bankruptcy on Nov. 21 under Chapter 11 case number 20-34656.

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