Gibson – one of America’s iconic guitar makers – is spiraling toward a massive restructuring:
Less than six months out from those crucial deadlines, the prospects for an orderly refinancing — Gibson has hired investment bank Jefferies to help with that — look slim, observers say. And the alternative scenarios look likely to sideline longtime owner and CEO Henry Juszkiewicz.
“At the end of the day, someone will take control of this company — be it the debtors or the bondholders,” Debtwire reporter Reshmi Basu told the Post this week. “This has been a long time coming.”
The culprit would seem to be corporate overextension – going into debt to buy subsidiaries like Baldwin Piano, and an assortment of home and pro audio marques – rather than the guitar business itself, which is still a good home base:
Gibson needs to report by next week its final numbers for its fiscal third quarter to stakeholders. One thing bond owners will be watching for is an improvement in the company’s electronics business, which has been built up in the past few years via debt-fueled acquisitions but has seen sales slump of late.
Still, even a solid turnaround on that front won’t be enough for Juszkiewicz to avoid difficult conversations.
“Some type of restructuring will be necessary,” Cassidy said. “The core business is a very stable business, and a sustainable one. But you have a balance sheet problem and an operational problem.”
If this results in a fire sale of Les Paul Standards, on the other hand, that could improve my fundamentals…