Iconic guitar manufacturers Gibson are reportedly looking at the real prospect of "imminent bankruptcy", say Digital Music News.
The historic Nashville-based company, founded in Michigan in 1902, whose instruments are some of the most recognisable in the music world (the Les Paul, SG, Explorer, and Flying V are some of the best-known models), reports an annual revenue of over $1 billion.
Despite the prestige and seemingly stable financial situation, Gibson is struggling with debts (reportedly upwards of $1.6 billion) and recently lost Bill Lawrence - its CFO - after less than 12 months in the role. Lawrence departs just six months before $375 million of senior secured notes are set to mature, reports the Nashville Post. If these notes are not adequately refinanced by 23 July, $145 million more in bank loans will become immediately due.
According to the Nashville Post, "prospects for an orderly refinancing... look slim". This means that CEO Henry Juszkiewicz must now decide whether to exchange the debt for potentially costly new notes, try and trade some of his equity in the company for debt payments, or declare bankruptcy.
"This year is critical and they are running out of time - rapidly," says Kevin Cassidy, a senior credit officer at Moody’s Investors Service, to the paper. "And if this ends in bankruptcy, [Juszkiewicz] will give up the entire company."
In recent years sales of guitars have plummeted to worrying levels - The Washington Post looked into the issue last year - with some reports suggesting that new purchases have slumped a third over the past decade.