Guitar Center, a 61 year-old musical instrument retailer owned by Ares Management, plans to file for prepackaged Chapter 11 bankruptcy protection, per the New York Times.
Why it matters: This is one of the last chapters of private equity's so-called Golden Age, during which well-known retailers were taken private with huge new debt obligations but without meaningful e-commerce strategies.
- Bain Capital bought Guitar Center for $2.1 billion in 2007, while Ares acquired control in 2014 via a debt-for-equity swap. It currently has around $1.3 billion in debt and missed an interest payment last month.
The bottom line: "Although many people have turned to hobbies like playing music while homebound, the biggest winners have been those with the strongest e-commerce infrastructure. In musical instruments, the online retailer Sweetwater was already threatening Guitar Center’s brick-and-mortar business," per the Times.
