On March 12, 2018, S&P Global Ratings lowered its corporate credit rating on Guitar Center Holdings, Inc. and its operating subsidiary and borrower Guitar Center Inc. to CC from CCC-. According to S&P Global, Guitar Center announced refinancing transactions for its secured debt and an exchange offer for its unsecured notes. S&P considers the debt exchange offer to be a distressed transaction.
On March 14, 2018, Moody’s Investors Service stated that if the exchange offer announced by Guitar Center, Inc. (GCI) on March 12, 2018 proceeds as outlined, it will constitute a distressed exchange, which is an event of default under Moody’s definition of default. As a result, Moody’s downgraded GCI’s probability of default rating to Ca-PD from Caa1-PD and affirmed its corporate family rating at Caa1. GCI’s proposal involves: (1) the exchange of its existing $325 million 9.625% senior unsecured due 2020 for new $325 million senior unsecured notes due 2022 with a 5% cash pay and 8% payment in kind feature; (2) the issuance of new $635 million senior secured notes due 2021; and (3) the amendment and extension of the Company’s $375 million asset-based loan maturity to 2022 from 2019. Read more on distressed companies.
The post Guitar Center Distressed Debt Exchange appeared first on Daily Bankrupt Company Updates | Bankrupt Company News.