Gibson Guitar Faces Imminent Bankruptcy After 116 Years In Company

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Gibson Les Paul Traditional T 2016 White Wine Red We’ve been hearing about declines in guitar sales for many years. Now, among the most storied guitar makers in history– Gibson– might remain in major trouble.Gibson Guitar is

now falling on difficult times, and softer guitar sales are simply part of the image. According to details appearing this week, the company stays deluged in financial obligation, with desperate sell-offs to service a growing list of debtors.Ringing the frightening alarm is Nashville Post

reporter Geert De Lombaerde, who unearthed mountainous debt payments and an intensifying monetary crisis. De Lombaerde indicated a recent,$16.6 million coupon payment by Gibson to service$375 million in senior secured notes that come due this year.The debt stack wasn’t a trick to annoyed bond holders.

De Lombaerde is seeing an iceberg ahead.”The situation dealing with the iconic Nashville-based music instrument maker, which has yearly profits of more than$1 billion, is far from regular, “De Lombaerde remarked.”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 right away if those notes, issued in 2013, are not refinanced by July 23rd.” Gibson Guitar factory in Kalamazoo, MI, 1936 (Kalamazoo Town Library) Gibson Guitars started in 1902, and has actually been interwoven into the musical life of America ever since.Back in 1952, the

company produced its first signature Les Paul, perhaps one of the most well-known guitar series of all time. The rest, as they say, is history. That storied history is making the present harder to stomach.Just recently, Gibson offered its ownership of the previous Baldwin Piano storage facility for$ 6.4 million. Now, the guitar maker is attempting to offload an even bigger Nashville property: the Valley Arts structure, situated on Church Street. The selloff is expected to draw $11 million. Both payments are most likely to vaporize practically instantly to service a growing financial obligation tranche.We’ve checked out a different report that Gibson is offering off Baldwin totally– though that hasn’t been confirmed.Gibson still pulls annual incomes north of $1 billion. Multiple investors are now stating the’b-word’out loud. “This year is crucial and they

are running out of time– rapidly,”Kevin Cassidy, a senior credit officer at Moody’s Investors Service, told the Post.

“And if this ends in insolvency, [CEO/owner Henry Juszkiewicz] will give up the whole company.”Moody’s has already devalued Gibson. And others are projecting a significant modification ahead– in leadership, or overall control of the company.One concern is whether drooping guitar sales are playing a role here. This has been a growing problem for years, thanks to surging interest in EDM and rap. But wider cultural shifts are putting the guitar in the rearview. Indeed, the repeating’rock & roll is dead ‘cliché may lastly be becoming a reality– and seriously affecting Gibson’s bottom line.Incidentally, Moody’s also downgraded Guitar Center last year, also. The mega-retailer, a huge seller of guitars, is encumbered more than$1.6 billion in debt.The issue of plunging guitar sells first became glaringly evident last year.That’s

when sales figures revealed a major sales drop over the past decade. Specifically, guitar sales have dropped from around 1.5 million units every year to roughly 1 million

— all in less than a years. That’s still a million a year, though this is all heading in the wrong direction.One obvious issue is that the guitar is just another toy for younger individuals today. Up until reasonably recently, it was a must-have for a huge portion of young Americans– all of whom were in love with rock & roll in some kind or another. Now, the six-string is just

as easily replaced by a turntable, a videogame console, or just a laptop.And the ‘ guitar gods’of the past are fading, with their adherents downsizing. “I do not understand. Maybe the guitar is over,” Eric Clapton said last year when asked & about wearing down guitar sales. “Great concern though.”

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