APRIL 3 | GUITAR CENTER | NEWS
Ares Management Takes Control of GC

Guitar Center announced today that Ares Management LLC has taken a controlling stake in the company through a partial debt-to-equity exchange.

The new deal reduces Guitar Center's total debt by about $500 million and cuts its annual cash interest expense by more than $70 million.

Guitar Center's former owner, Bain Capital, kept partial ownership of the company and representation on the board. Bain Capital bought the retailer in 2007 for $2.1 billion, borrowing $1.56 billion in making the purchase.

Along with the debt-to-equity exchange, Guitar Center refinanced its remaining debt for a lower interest rate, giving it more flexibility and improved credit terms over the next five years.

“On a cash flow basis, we expect to save more than $70 million a year in cash interest expense," said Tim Martin, Guitar Center's CFO, in a release. "In addition, the removal of the restrictive term loan covenant and extension of the maturity dates of our facilities provides us with financial flexibility to execute our strategic plan and to grow the business.”