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Guitar Center Inc. filed for bankruptcy Saturday, as the coronavirus pandemic continues to batter the retail industry.
The retail chain, the largest seller of musical equipment in the U.S., said Saturday it was filing for Chapter 11 bankruptcy protection, and plans to keep its nearly 300 U.S. stores open during the process.
"This is an important and positive step in our process to significantly reduce our debt and enhance our ability to reinvest in our business to support long-term growth," Chief Executive Ron Japinga said in a statement. "Throughout this process, we will continue to serve our customers and deliver on our mission of putting more music in the world. Given the strong level of support from our lenders and creditors, we expect to complete the process before the end of this year."
Guitar Center said its owner, Ares Management Corp. along with new investors including funds managed by the Carlyle Group and Brigade Capital Management, will provide financing through the bankruptcy process.
Guitar Center said it plans to reduce its debt by $800 million, and has received $165 million in new equity investments. The company said it has negotiated to have a total of $375 million in debtor-in-possession financing provided by lenders and current noteholders, and it intends to raise another $335 million in senior secured notes.
Like other retailers, coronavirus restrictions forced Guitar Center to temporarily close most of its stores earlier this year, which severely hurt sales.