Gibson Guitars could be facing bankruptcy, says new report
The 116 year old company based out of Michigan, USA lost its CFO last year and is set to undergo a major financial restructuring to avoid filing for bankruptcy.
Iconic guitar brand Gibson could be facing bankruptcy, if new reports are to be believed.
According to a report by the Nashville Post, "the situation facing the iconic Nashville-based music instrument maker, which has annual revenues of more than $1 billion, is far from normal. CFO Bill Lawrence recently left the company after less than a year on the job and just six months before $375 million of senior secured notes will mature."
"On top of that, another $145 million in bank loans will come due immediately if those notes, issued in 2013, are not refinanced by July 23rd," the report also claimed.
Responding to the news, Gibson Brands CEO Henry Juszkiewicz outlined their plans to the Nashville Business Journal: "We have been monetizing assets like stock holdings, real property and business segments that could not achieve the level of success we expected. By monetizing these assets, we can reduce debt and generate funds to contribute to business segments that are thriving. It is important to our business to get back to the financial success we had to achieve the best financial terms in the refinancing of our company."
Gibson has been making guitars since 1902, for a hundred and sixteen years now and is famously associated with some of the biggest names in rock, including Jimmy Page, Slash, Santana, Jeff Beck, Zakk Wylde, Randy Rhodes and more. Founded in Michigan, USA, the company also produces the iconic Les Paul line of guitars. Indeed, if it does come down to the company shutting down, it would be the end of an era of rock music.
The company, which generates $1 billion each year in revenue, recently departed from the Nashville warehouse where it has operated since the 1980s. Reportedly, without a chief financial officer, Gibson’s owner Henry Juskiewicz is trying to reorganize the company’s finances with large investments in electronics companies purchased over the last few years, "but is facing a battle with creditors over bad business decisions."
But all hope might not be lost yet. According to another report by the Dayton Daily News, there are experts in both music and finance who believe that Gibson might be able to survive the declaration of bankruptcy, due to their overwhelming name value and tradition, with a massive influence on the creation and evolution of rock and roll.
Gibson needs to report its final numbers for its fiscal third quarter to stakeholders by next week. "Some type of restructuring will be necessary," said Kevin Cassidy, a senior credit officer at Moody’s Investors Service. "The core business is a very stable business, and a sustainable one. But you have a balance sheet problem and an operational problem."
Here’s hoping that it doesn’t come down to the worst option and that the name that adorned the guitars of rock gods through the golden era of rock remains intact.
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