By Paul A. Harris
Portland, Ore., Dec. 8 – Guitar Center, Inc. priced an upsized $350 million issue of five-year senior secured notes (Caa1/B-) at par to yield 8½% on Tuesday, according to market sources.
The issue size increased from $335 million.
The yield printed on top of yield talk, which had tightened from earlier talk of 8¾% to 9%.
The deal is a blowout, according to a bond trader, who added that order books were heard to be at least four-times the size of the offering early Tuesday.
Dealers accelerated the timing of the Rule 144A and Regulation S for life offering. The deal had initially been expected to remain in the market into the later part of the Dec. 7 week.
UBS Securities LLC was the left lead bookrunner. Joint bookrunners were J.P. Morgan Securities LLC, BMO Capital Markets Corp. and Citizens Capital Markets, Inc.
The notes were sold via Guitar Center Escrow Issuer II, Inc., which is to 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.
| Issuer: | Guitar Center Escrow Issuer II, Inc., to be merged with and into Guitar Center, Inc.
|
| Amount: | $350 million, increased from $335 million
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| Maturity: | Jan. 15, 2026
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| Securities: | Senior secured notes
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| Left lead bookrunner: | UBS Securities LLC
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| Joint bookrunners: | J.P. Morgan Securities LLC, BMO Capital Markets Corp. and Citizens Capital Markets, Inc.
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| Coupon: | 8½%
|
| Price: | Par
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| Yield: | 8½%
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| Call protection: | Two years
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| Trade date: | Dec. 8
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| Settlement date: | Dec. 15
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| Ratings: | Moody's: Caa1
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| S&P: B-
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| Distribution: | Rule 144A and Regulation S for life
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| Price talk: | 8½%, revised from 8¾% to 9%
|
| Marketing: | Roadshow
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