Guitar Center selling $335 million five-year secured notes as it addresses bankruptcy

By Paul A. Harris

Portland, Ore., Dec. 7 – Guitar Center, Inc. plans to sell $335 million of five-year senior secured notes, according to an informed source.

The deal is scheduled to roll out on an investor conference call at 1:30 p.m. ET on Monday and to price later in the Dec. 7 week.

UBS Securities LLC is the left lead bookrunner.

The Rule 144A and Regulation S for life notes become callable after two years at par plus 50% of the coupon.

The issuing entity will by Guitar Center Escrow Issuer II, Inc., which will be merged with and into Guitar Center, Inc.

The Westlake Village, Calif.-based musical instrument retailer plans to use the proceeds, along with proceeds from the other restructuring transactions, to pay off its ABL DIP facility, term DIP facility and $42 million outstanding under its superpriority notes, as well as to pay the cash portion of the consideration to holders of the existing secured notes in settlement of their claims, to pay fees, interest and expenses in connection with restructuring transactions and bankruptcy cases, and for general corporate purposes.

Guitar Center filed for Chapter 11 bankruptcy protection in late November.

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