There’s more troubling news abound for industry giant Gibson Guitars. After announcing plans to sell off their downtown Memphis factory, rumors have been flying that they may be facing bankruptcy in the coming months.
In an article for the Nashville Post, Geert De Lombaerde laid out the dire state of affairs. “The situation facing the iconic Nashville-based music instrument maker, which has annual revenues of more than $1 billion, is far from normal,” he wrote. “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.”
He adds that observers say the likelihood of refinancing at a reasonable rate are slim. De Lombaerde consulted with Moody’s Investors Service senior credit officer Kevin Cassidy, who explained that “This year is critical and they are running out of time — rapidly… Some type of restructuring will be necessary. The core business is a very stable business, and a sustainable one. But you have a balance sheet problem and an operational problem.”
Gibson has been in company for 116 years and owns the subsidiaries Epiphone, Cakewalk, TEAC, and more. We’ll keep you posted as more information becomes available.