We’ve been keeping you updated on the sad news relating to the possible bankruptcy of one of the guitar world’s foremost manufacturers Gibson. First it was set for closure, then CEO Henry Juszkiewicz assured that the debt was run of the mill and now it seems that it’s more likely a ‘internal coup’.
The drama continues on tonight’s episode of ‘The Gibson Show’…
But actually, it’s not really that funny an affair, the brand have been long time favourites for so many musicians but we learned last week that Gibson was struggling to meet its obligations on $375 million worth of debt. According to multiple analysts and investors, the default risk considered high and would likely result in bankruptcy.
In steps CEO Henry Juszkiewicz who claimed that the debt and the date was actually just part of business and we should all carry on with our lives. But now it transpires that this was a thinly veiled attempt to hide the internal struggle continuing at Gibson HQ.
A report in Bloomberg this week hinted that holders of the $375 million debt tranche are pushing for an ultimatum. Either the leadership changes or they push the illustrious brand in to bankruptcy. It seems that both CEO Henry Juszkiewicz and recently reappointed CFO Benson Woo.
With two-thirds of the debt in the name of the ‘coup group’ they hold serious leverage, and enough to force Gibson Guitar’s chairman and CEO to possibly eliminate himself from the company.
But as you might expect the CEO is not yet ready to give up and is instead opting to secure separate loans of around $400 million. This would side step the mutiny but Bloomberg don’t seem as confident “Credit analysts have raised doubts that the company can repay borrowings coming due as soon as July.”
The bondholders felt similarly skeptical about this idea “The holders don’t expect Gibson’s earnings will be strong enough to attract new money for a refinancing to head off a default looming later this year, and creditors are reluctant to invest more funds while Juszkiewicz is still in charge…”
So, what does it all mean?
In real terms, unless there’s huge changes of hearts from either party, there will be no Gibson guitars after July 23rd 2018 – 150 days away.