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Guitar Center Holdings, Inc. is mulling options including bankruptcy, seeking to weather its high debt load after it skipped bond interest payments this month, according to people with knowledge of the situation, Bloomberg reports.
The Company is reportedly negotiating with its lenders on reconstructing its liabilities which could see certain holders take control of the Company. Guitar Center is also weighing other options similar to a refinancing deal it concluded in April this year after some of its stores were temporarily shut in the wake of the pandemic, the people said.
Moreover, some Guitar Center investors are in private negotiations with the Company and advisers and have signed non-disclosure agreements, the people said. Should the Company decide to file for bankruptcy, it would do so after getting a majority of its creditors to support a restructuring plan that could swap debt for equity in the reorganized company, they added.
Guitar Center skipped October interest payments on its notes due in 2022 and 2021 and is currently operating under a 30-day grace period that expires in mid-November. The Company is reportedly seeking to close a deal with creditors during that time but the forbearance could be extended to allow talks to continue, the sources said.
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