Where there is shouting, there is no true knowledge.

― Leonardo da Vinci

Guitar Center

  • Bucking trend, Guitar Center plans big expansion, overhaul of store fleet (Fortune): With a deleveraged balance sheet after a debt-for-equity swap with Ares Management, specialty retailer Guitar Center is embarking on an aggressive growth strategy.  The company is aiming to grow its store count (currently 262) by 15 to 20 stores a year for the foreseeable future.  With a focus on smaller format stores and differentiated service offerings, the growth strategy leverages the company’s strength as the market leader (it is estimated to have over 30% market share in the U.S. music retail sector) and should leave owners Bain Capital and Ares Management well-positioned for an attractive exit in coming years.
  • Phoenix Payment Files Chapter 11, Seeks DIP from Bancorp (ABFJournal): Credit card processor Phoenix Payment Systems recently filed chapter 11.  The company, which has been experiencing cash flow troubles throughout 2014, has lined up a stalking horse bidder at a purchase price that would satisfy all creditor claims and provide a recovery to equity investors.
  • Eagle Bulk Shipping Files for Bankruptcy in New York (Bloomberg): The company, having struggled with weak shipping rates since 2008, is seeking to cut debt by nearly $1 billion.
  • Another Casualty of the Department of Energy’s Loan Program Is Making a Comeback (Slate): Energy Company Beacon Power, once written off as just another poor use of funds by the much-maligned U.S. Department of Energy, may not have been such a bad bet after all.  The company filed for bankruptcy the year after receiving a $43 million Department of Energy loan for construction of a 20 megawatt facility in Stephentown, New York.  Post-bankruptcy, however, private equity firm Rockland Capital has led an impressive turnaround, and the company is once again expanding.
  • Argentina’s Griesafault (Project Syndicate): The ruling by U.S. federal judge Thomas Griesa barring Argentina from making payments to any creditors before dealing with holdouts is a worrisome development for not only Argentina, but for the entire financial system, according to Nobel laureate Joseph Stiglitz.  Absent the ability to restructure debts when they become too onerous, countries face protracted stretches of below-trend economic growth.

About the Author

David Johnson (@TurnaroundDavid) is a partner with ACM Partners, a boutique financial advisory firm providing due diligence, performance improvement, restructuring and turnaround services.  He can be reached at 312-505-7238 or at david@acm-partners.com.