“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 23.”
In the same report by the Post, Kevin Cassidy, who is a senior credit officer at Moody’s Investor Service said that Gibson Guitar CEO Henry Juszkiewicz essentially has just three options.
He and his team could negotiate an exchange of their debt coming due for new notes, which may not be feasible at a reasonable price. Other than that, Juszkiewicz could also be persuaded or force to give up some of his equity in exchange for the debt payments or he may end up taking the brand to bankruptcy court.
“This year is critical and they are running out of time – rapidly, and if this ends in bankruptcy, he will give up the entire company,” added Cassidy.
The brand was founded in Michigan, USA over a 100 years ago and was famously used by music legends such as Jimmy Page, Carlos Santana, Angus Young, Slash and beyond.
For more news, click here.