Is Guitar Center, the music store we all love to hate, going broke? It looks that way, according to a number of news stories in The Nation, Reuters, Huffington Post, and a wonderful post by Eric Garland. As many of you already know, GC was purchased by Bain Capital (formerly owned by Mitt Romney) six years ago, and it’s been downhill ever since.
GC has a number of problems, not all of its making. One is that it carries a huge amount of debt as a result of the Bain deal, currently owing over $1.18 billion (yes, that’s with a b). That’s a lot of interest it’s paying on the debt service (just think of what you pay on your credit card every month), plus it seems to have a $953 million(!!) balloon payment coming up in 2017 that’s really going to stretch the company’s finances to its limits.
Then there’s the fact that the employees in some cities have tried to unionize, which has not only sent chills through company management, but has caused (along with other factors) the company’s stock to fall to junk status. GC tried to counter by giving its employees an extra $1.25 an hour, but that hardly seems enough to appease its poor abused workers.
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