Electric guitar maker Gibson – beloved of rock musicians the world over – could be facing bankruptcy, according to reports.
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.
Gibson is highly leveraged at 10 times debt to earnings, and has $375m in senior bonds maturing on 1 August 2018.
Bank loans worth $145m will also fall due if the bonds can’t be refinanced, according to figures released last year – when Moody’s downgraded Gibson to a Caa3 rating, nine grades down into junk territory.
Now the company is staring down the barrel of a gun, according to the Nashville Post.
Gibson has annual revenue of more than $1bn, but chief finance officer Bill Lawrence has left the firm after less than a year in the post and the bond repayment date is looming ever closer.
CEO Henry Juszkiewicz told the Nashville Business Journal the company was “monetising assets … to reduce debt and generate funds to contribute to business segments that are thriving”.