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S&P downgrades Guitar Center
Standard & Poor's said it lowered the corporate credit rating on Guitar Center Holdings Inc. to SD (selective default) from CC.
The agency also said it lowered the ratings on the company's $401.8 million unsecured notes and $375 million operating company notes to D from C.
The downgrade follows the completion of a distressed-exchange transaction, S&P said.
The company exchanged $401.8 million of its holding company unsecured notes into holding company preferred stock, the agency said. The company also refinanced its $375 million of operating company unsecured notes with new $325 million senior unsecured notes, S&P said.
The remaining balance of the notes, along with accrued interest and transaction fees, were converted into operating company $100 million preferred stock, the agency added.
Both transactions were treated as tantamount to a default, given the current distressed financial condition of the company and since the investors are receiving less than the original promise of the original security, S&P said.
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