Guitar Center negotiates to increase credit facility

By Angela McDaniels

Seattle, March 10 - Guitar Center Inc. is in discussions with its lending syndicate to increase the maximum borrowings allowed under its credit facility, according to a 10-K report filed with the Securities and Exchange Commission on Thursday.

The company is pursuing the increase because it believes its peak seasonal liquidity needs during 2006 will exceed its projected net cash flow from operations and borrowings currently available under the facility.

Traditionally, the company's cash use peaks in the latter part of the third quarter and in the fourth quarter due to the build up of inventory to support the holiday season, according to the 10-K report.

Guitar Center is a retailer based in Westlake Village, Calif., that sells guitars, amplifiers, percussion instruments, keyboards and professional audio and recording equipment.

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