S&P takes actions on Guitar Center

Standard & Poor's said it lowered its corporate credit rating on Guitar Center Holdings Inc. to CC from CCC+.

The outlook is negative.

The agency also took the following actions on the company's existing debt instruments:

• Lowered the issue-level rating on the company's $323 million ABL revolving credit facility to CCC from B. The 1 recovery rating is unchanged;

• Lowered the issue-level rating on the company's $650 million term loan to CC from CCC+. The 3 recovery rating is unchanged; and

• Lowered the issue-level rating on the company's senior unsecured debt to C from CCC-. The 6 recovery rating is unchanged.

Upon successful completion of the proposed debt exchange, S&P expects to lower the corporate credit rating to SD and lower the issue-level ratings on the existing senior unsecured notes at both the holding company and operating company to D.

As soon as possible after lowering the ratings, the agency plans on raising the corporate credit rating to B- with a negative outlook, assuming all aspects of the restructuring and completed as indicated.

In addition, S&P assigned ratings to the company's proposed credit facilities, based on a projected corporate credit rating of B- following the restructuring transaction. The agency rated the $325 million senior secured bank loan B+, with a recovery rating of 1, indicating an expectation of very high recovery (90%-100%) in the event of a payment default.

S&P rated the $615 million secured notes B- with a recovery rating of 3, indicating an expectation of meaningful recovery (50%-70%), and rated the unsecured $325 million notes CCC, with a recovery rating of 6, indicating an expectation of negligible recovery (0%-10%).

The actions reflect the company's announcement that it plans to exchange its $401.8 million of senior unsecured notes (of which there is $463 million currently outstanding, including accrued interest) into holding company preferred stock, S&P said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.