Guitar Center secures three-year debt extension to ensure it can deliver on its business plan

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The announcement comes amid increasing challenges for brick-and-mortar guitar stores and ongoing changes at Guitar Center to battle competition from digital retailers

General views of the Hollywood Rock Walk at the Guitar Center on the Sunset Strip after the announcement of rock legend Eddie Van Halen's death on October 06, 2020 in Hollywood, California
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Guitar Center has announced it has reached an agreement with investors to extend the payback period on its debt.

According to Business Wire, Guitar Center is restructuring part of its debt, making a deal with “an ad hoc group of investors 70% of its outstanding 8.50% Senior Secured Notes due January 2026,” and has reached an agreement to extend the maturity of the debt to 2029.

The three-year period is “designed to extend the Company’s liquidity runway and provide the time necessary to deliver on its business plan.” The company has also started the official process to let all bondholders agree to this swap and, if all goes to plan, expects to complete the transaction in August.

Guitar Center’s announcement provides some respite for the leading retailer – and comes amid tariff uncertainties, growing competition from digital retailers, and the closure of several prominent guitar stores in various countries, including last year’s closure of all Sam Ash Music stores in the U.S.

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According to Guitar Center CEO Gabe Dalporto, several changes have been introduced to ensure the company can withstand this new environment.

“On Amazon – when you think about what we can uniquely provide for the musician – low-end, cheap, toy-like instruments… that’s not where we’re gonna win, right? The premium product is where people are gonna take the time and care, and want to experience it, and that’s why that’s important to us," he told YouTuber Phillip McKnight back in March.

“We are leaning into that really high-quality, premium product where experience matters. That’s where we can win against Amazon. It’s not in the low-end cheap stuff, right? We’ll have entry level [gear], but we’re just not going to compete with the factory direct-from-China stuff. It’s not a winnable space.”

Among these ongoing shifts, Dalporto has also laid out future plans to restore the retail giant’s prestige and reassert its reputation.

Guitar World has reached out to Guitar Center for comment.

Janelle Borg
Janelle Borg

Janelle is a staff writer at GuitarWorld.com. After a long stint in classical music, Janelle discovered the joys of playing guitar in dingy venues at the age of 13 and has never looked back. Janelle has written extensively about the intersection of music and technology, and how this is shaping the future of the music industry. She also had the pleasure of interviewing Dream Wife, K.Flay, Yīn Yīn, and Black Honey, among others. When she's not writing, you'll find her creating layers of delicious audio lasagna with her art-rock/psych-punk band ĠENN.

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