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Guitar Center offers PIK notes, warrants for 9 5/8% notes due 2020
New York, March 12 – Guitar Center, Inc. began an exchange offer and consent solicitation for its $325 million of 9 5/8% senior notes due 2020, according to a news release.
The company is offering 5% cash, 8% PIK notes due 2022 and warrants to purchase common stock of parent Guitar Center Holdings, Inc. in exchange for the existing notes.
For each $1,000 principal amount of the existing notes, Guitar Center is offering $1,000 of new notes and warrants plus an early tender fee in cash of 0.5% of the principal amount.
The early tender fee will only be paid for notes tendered by the early deadline of 11:59 p.m. ET on March 23.
The exchange ends at 5 p.m. ET on April 11.
Guitar Center is also soliciting consents to amend the indenture of the 9 5/8% notes.
The offer is being conducted under Rule 144A and Regulation S.
Completion of the exchange is subject to conditions including that at least 95% of the existing notes be tendered, the closing of the offering of new notes announced by the company on Monday and the support agreement not having terminated.
Settlement is planned for the fourth business day following the expiration of the offer.
Guitar Center has entered into a support agreement with holders of $299 million, or 92%, of the existing notes under which those holders have agreed to tender their notes and deliver consents.
As part of the transactions, Guitar Center plans to amend its $375 million senior secured asset-based revolving credit facility to extend the maturity date to the earlier of five years from the date of the amendment and 90 days prior to the maturity date of the new notes if the notes have not been refinanced by that date.
KCC LLC (877 833-4150, 917 281-4800 or www.kccllc.net/GuitarCenter) is information agent.
Guitar Center is a Westlake Village, Calif., retailer of musical instruments.
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