Guitar Center confidential files its IPO: Debtwire



Dive brief:

  • Guitar Center management has filed confidential registration documents for an initial public offering with the Securities and Exchange Commission, according to a Debtwire report that cites anonymous sources.
  • The filing follows increased sales and profits for the retailer, which trended both upward from last year and into 2019 in the company’s last quarter, according to data from Debtwire.
  • The S-1 case also comes less than a year after Guitar Center filed for bankruptcy under the weight of debt and pandemic disruption. The company did not immediately respond to a request for comment.

Dive overview:

What a difference a year has made. In 2020, around 30 large retailers went bankrupt as the pandemic spread to the industry and hit the companies with the most debt and the weakest financial profiles.

So far in 2021, with a general recovery in sales and a boom in the stock market after the liquidation last spring, 12 companies in the retail industry have filed for IPO, either through ” an IPO or a public listing.

Guitar Center has the distinction of being the only company on these two lists.

The musical instrument retailer made a relatively quick trip to bankruptcy last year in a process that allowed it to rid itself of hundreds of millions of dollars in debt while raising new capital.

At the time, Guitar Center CEO Ron Japinga noted the “difficult times created by the pandemic” that led to its filing. But the company was hampered by debt for years after multiple private equity takeovers.

Guitar Center was originally founded by Wayne Mitchell in 1959 as an organ store located in Hollywood, California. After The Beatles helped solidify rock and roll’s hold on the American music scene, “The Organ Center” eventually became Guitar Center, focused on the in-store experience and building relationships with musicians.

In 2007, the retailer was acquired by Bain Capital as part of an LBO. Bain would continue to sell it to Ares Management, which retained a post-Chapter 11 stake in the company, with Brigade Capital Management and The Carlyle Group also joining its ownership group.

According to one of the retailer’s main competitors, a period of divestment in its stores, employees and inventory followed its acquisition of private equity.

That rival, Chuck Surack, CEO of online guitar seller Sweetwater, told Retail Dive last year that the music world needs Guitar Center and its stores.

“They are good for our industry, although they are not as good as they used to be,” Surack said last fall. “Our industry is in great need of them. They need to inspire young people to come and learn to play an instrument.”

Upon emerging from bankruptcy in December, Japinga said the process had given Guitar Center “the financial and operational flexibility we need to reinvest in our business and support our long-term sustainable growth.”

Filing a Guitar Center IPO is a sign that the company is healthy, good enough at least that management thinks it has something that might be of interest to investors. An IPO could also mean an influx of capital that could be used to reduce its remaining debt. and invest in its operations.


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