Gibson hires new CFO and hits back at ‘bankruptcy’ claims
Troubled guitar maker Gibson Brands has hit back at recent reports it is facing bankruptcy, on Monday announcing the appointment of a new CFO and revealing that it has been paying its debts on schedule.
The ‘bankruptcy’ story spread across the Internet and even strayed into the mainstream media over the past ten days, following an article in the well-informed Nashville Post on 2nd February and subsequent speculation on fan sites. By last week it had reached consumer sites such as Music Radar and even the NME.
Essentially, as revealed and discussed in MIN in September 2016 and again in August 2017 the company had expanded into consumer electronics with the purchase of brands such as Phillips USA and Onkyo which, added to brands it also already owned such as Teac/Tascam and Cakewalk (subsequently dropped, as revealed here) has left it saddled with debts which some feel it may not be able to meet – hence repeated downgrades by ratings agency Moody’s and continued questions over the management style and strategy of Gibson Chairman and CEO Henry Juszkiewicz.
Responding to recent speculation however, on Monday 19th February Gibson announced that Benson Woo is to return to Nashville immediately to take over as CFO. Woo is no stranger to Gibson and had remained with the Gibson-owned Teac as a director of the company since 2015. He replaces former CFO Bill Lawrence, whose departure after less than a year with the Nashville based company, fanned the flames surrounding its future.
In a statement to the Nashville Post, Henry Juszkiewicz said: ‘We are excited and pleased that Benson with be coming back to the Gibson Brands family. He has a great knowledge of the industry, our current businesses and is liked and respected by everyone at Gibson and with whom he dealt. We are confident he will contribute to moving the company forward.’
The immediate problem facing Gibson is the August maturity of $375 million of senior secured notes and a further $145 million in bank debt due in July if the notes haven’t by then been refinanced. Juszkiewicz was quoted last week as saying he is working on a new credit facility and ‘fully expects the bonds to be refinanced in the ordinary course of business.’
Meanwhile, on 2nd February Gibson Brands announced that the company made a $16.6 million coupon payment to holders of its $375 million, 8.875% senior secured notes due in 2018.
Despite this, the company has been selling property in Nashville but even that hasn’t been without its difficulties. Two New York based investors are currently suing Gibson over the sale of the Gulch Building, formerly home to Valley Arts. Other property sold by Gibson includes the former Baldwin Piano warehouse, sold in November for $6.4 million and a further property in Memphis.
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