Gibson has been one of the world’s leading manufacturers of electric guitars for years. Throughout their century of existence, countless musicians–from famous rock stars to local barroom heroes–have used Gibson guitars to create the soundtrack to our world. However, according to various recent reports, Gibson has fallen on particularly tough times financially and could face imminent bankruptcy. The company has faced declining sales for years, several large loan debts are about to come due.
Explains 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…”
As Debtwire reporter Reshmi Basu told the Nashville Post, “At the end of the day, someone will take control of this company — be it the debtors or the bondholders…This has been a long time coming.” Digital Music News notes, Gibson still pulls annual revenues north of $1 billion. But their revenue does not come close to covering their loan debts, and sales have been falling each successive year. Multiple investors, bondholders, and analysts are now talking bankruptcy.
A senior credit officer from Moody’s Investors Service told the Digital Music News, “This year is critical and they are running out of time — rapidly–and if this ends in bankruptcy, [CEO/owner Henry Juszkiewicz] will give up the entire company.” They also note that Moody’s, who ranks companies’ viability for investors, has already downgraded Gibson’s status, just as they did with the similarly struggling Guitar Center last year.
Various factors may be affecting the shrinking electric guitar market. Some feel it’s a result of a shift in the music zeitgeist away from guitar-driven music and toward more digitally-produced styles like EDM and hip-hop. Others speculate that the increased durability and decreased prices–while great for those looking to buy and sell used gear–have begun to cripple the company’s ability to sell new instruments.
Here’s hoping that Gibson can figure out their financial issues and stay afloat. If you feel strongly about the company’s dire straits, you can go to their website and buy a new Gibson today. Otherwise, you can go check out their instruments in action wherever music is played and hope for the best.
[H/T The Nashville Post]