Guitar Center talks $635 million 3.5-year notes with 9½% coupon, 10%-10¼% all-in yield

By Paul A. Harris

Portland, Ore., March 14 – Guitar Center, Inc. talked its $635 million offering of 3.5-year senior secured notes (CCC+) with a 9½% coupon and an all-in yield of 10% to 10¼%, according to a syndicate source.

The official yield talk comes tight to the 10% to 10½% initial talk, a bond trader said.

Books close at 2 p.m. ET on Wednesday, and the deal is set to price thereafter.

UBS Investment Bank is the lead bookrunner. Wells Fargo Securities LLC, BofA Merrill Lynch, J.P. Morgan Securities LLC and Citizens Capital Markets Inc. are the joint bookrunners.

The Rule 144A and Regulation S for life notes become callable after one year at par plus 50% of the coupon upon a change of control. Otherwise they are callable after 1.5 years at par plus 75% of the coupon.

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

The Westlake Village, Calif., music retailer plans to use the proceeds to redeem its 6½% senior secured notes due 2019.

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