Excellent, informative article about the imminent collapse of Guitar Center.
GC is closing?? I guess retailing is dieing... Radio Shack and now GC...
Well this stinks.
The problem, once you read though all of the hyperbole, is the leveraged buy out, LBO, was really messed up.
Where do you find investors this dumb? Really, I want to know, I am in the capitol market now.
The private equity firms violated THE golden rule of financial leverage, e.g trade a appreciating asset for an deprecating asset. They did the reverse.
The trade they made was to trade high interest rate bonds, an (appreciating asset) for a deprecating asset (a static asset like Guitar Center).