Guitar Center, Inc., the parent company of commercial and residential AV installer AVDG and a giant musical instrument retailer with more than 300 retail locations, has filed for Chapter 11 bankruptcy protection.
As part of the Restructuring Support Agreement the company negotiated $375 million in financing from its existing lenders and plans to raise $335 million in investment.
Just a few weeks ago Guitar Center had reduced its debt by nearly $800 million and raised an additional $165 million in a restructuring agreement with key stakeholders.
All of its store locations, including AVDG, will continue to operate as normal during the bankruptcy proceedings.
In a statement, Ron Japinga, CEO of Guitar Center, said, “Today we announced a very important and positive step forward to ensure the long-term financial strength of Guitar Center. This agreement will allow us to significantly reduce our debt and reinvest in our business in order to better serve our customers and deliver on our mission of putting more music in the world. With 10 consecutive quarters of growth prior to the impact from COVID-19, we have been pleased with our resilient financial performance during these challenging times created by the pandemic.
“As a result of this financial restructuring process, we will be better equipped to execute on and invest in our strategic growth initiatives and we will continue delivering through the strength of our brands, availability of our stores, customer-focused associate relationships, innovative music education programs and our expanding digital solutions.”
Despite the troubles of its parent company, AVDG has been actively hiring for high-level positions within the company and growing via acquisition. Recent hires include Eric Miga as Director of Engineering, Jay Jones as National Procurement Manager, and Timothy Hill as GM of Eastern U.S. Operations.
In addition to AVDG, the No. 7 company on the CE Pro 100, Guitar Center’s other related brands include Music & Arts, Musician’s Friend, Woodwind Brasswind. Guitar Center has engaged in the custom installation business over the past several years with key acquisitions of first commercial specialists AVDG from the Bay Area of Northern California, then MDU specialist TVTI in Chicago and process-experts Maverick Integration of Nashua, N.H.
The company says in its filing that it plans to explore opportunities to “optimize its real estate portfolio and other agreements to focus on investments that best position the Company to return to its growth trajectory prior to COVID-19.”
In total, Guitar Center has between $1 billion and $10 billion in assets and liabilities. Its key stakeholders include its equity sponsor, a fund managed by the Private Equity Group of Ares Management Corporation, new equity investors Brigade Capital Management and a fund managed by The Carlyle Group, as well as supermajorities of its noteholder groups.
This article originally appeared on our sister site CE Pro. It has been edited.