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Guitar Center Downgraded

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On November 28, 2017, Moody’s Investors Service downgraded Guitar Center Inc.’s (GCI) ratings, including its corporate family rating to Caa1 from B3, probability of default rating to Caa1-PD from B3-PD, senior secured first lien notes to Caa1 from B3 and its unsecured notes were downgraded to Caa3 from Caa2. According to Moody’s, the downgrade and negative outlook reflect Moody’s continued concern regarding GCI’s significant and relatively near-term debt maturities. Excluding the Company’s $375 million asset-backed loan facility, approximately 65% of the Company’s long-term debt matures in April 2019. “The downgrade considers that despite Moody’s expectation that GCI will generate relatively stable earnings and positive free cash flow, a significant majority of the company’s debt matures in less than 18 months,” stated Keith Foley, a Senior Vice President at Moody’s.

On November 29, 2017, S&P Global Ratings lowered its corporate credit rating on Guitar Center Holdings, Inc. to CCC- from CCC+, its $375 million asset-based lending revolver due April 2, 2019 to CCC+ from B, its $615 million 6.5% senior secured notes due April 15, 2019 to CCC- from CCC+ and its $325 million 9.625% senior unsecured notes due April 15, 2020 to C from CCC-. According to S&P Global, the downgrade reflects S&P’s view that Guitar Center could likely execute a debt exchange offer within the next six months for its senior secured and unsecured notes. The Company is currently negotiating with its noteholders for a potential debt exchange transaction. Read more on distressed companies.

The post Guitar Center Downgraded appeared first on Daily Bankrupt Company Updates | Bankrupt Company News.


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