Iconic Guitar Maker Gibson On The Verge Of Bankruptcy?

The Edge with his Flying V guitar

Their iconic guitars have been played by some of the biggest rock stars all around the world, but we've learned that the company is on the edge of bankruptcy.

In a brief statement made one week ago, the beleaguered company - in business since 1902 - reported, "Gibson Brands, Inc. today announced that the company made a $16.6 million coupon payment to holders of its $375 million, 8.875% senior secured notes due 2018". It also said the firm would have the ability to pay back the company's debt in whole within seven years. Juszkiewicz hopes that his bold move will help lead the company to the best financial results.

We're not financial experts, but it seems there are loans coming to term mounting to 100s of millions of dollars which the company will not be able to honour given its current financial situation.

Senior Moody's Investors Service credit officer Kevin Cassidy detailed three options open to CEO Juszkiewicz: renegotiate the debt coming due; give up some of his own equity stake, or see one of the most recognized brands in the world in bankruptcy court, according to the Post.

Gibson Brands, Inc. has recently sold the Baldwin piano brand.

Deadline to return old paper £10 notes fast approaching
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The Post cites insiders as saying the company faces bleak prospects for an orderly refinancing, and possibly even bleaker ones for Juszkiewicz.

"This year is critical and they are running out of time - rapidly", remarked Cassidy, adding, "if this ends in bankruptcy, [Juszkiewicz] will give up the entire company".

The company is in the process of selling various real estate holdings, although those are not expected to bring anywhere near the funds required to right the ship.

Last year, one publication said that Gibson Brands Inc. generates about $3 billion in annual revenue.

Nashville-based Gibson makes the iconic Les Paul model, used by the likes of Jimmy Page, Pete Townshend and Carlos Santana, but is struggling to stay afloat. Yet as rock music has fallen from mainstream popularity so have the guitar sales that form the bulk of Gibson's business. "But you have a balance sheet problem and an operational problem".

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