Jimmy Page playing onstage at the legendary Earls Court Arena concerts in May 1975. © Jill Furmanovsky
Perhaps the most famous guitar manufacturer in the world, Gibson who are based in Nashville and who have given many a rock star an axe to grind, as it were, are on the brink of bankruptcy. We live in troubling times, indeed.
As reported by the Nashville Post the company, who make more than $1 billion in revenue per year, recently saw their CFO Bill Lawrence leave after being there less than a year. Along with that the company are possibly more than $375 million in debt—because, in six months $375 million of senior secured notes will mature and need to be refinanced. If that isn’t done by 23 July, then a further $145 million in bank loans will be due too.
Marc Bolan playing with T.Rex in Copenhagen, Denmark in March 1973. © Jorgen Angel
According to the Nashville Post the company have hired investment bank Jefferies to help with the refinancing, but the chances of meeting the deadlines “look slim, observers say.” It’s also thought the financial problems could mean CEO and owner Henry Juszkiewicz might be on the way out.
That’s because the debtors or bondholders will likely want to take control of Gibson, and because restructuring is inevitable to get the balance sheet and operational issues back on track. A senior credit officer at Moody’s, Kevin Cassidy (who, despite these current financial woes calls Gibson Brands Inc. “a very stable business, and a sustainable one”) told the Nashville Post that Juszkiewicz has three options.
According to the Post, “He and his team could negotiate an exchange of their debt coming due for new notes, which may not be feasible at a reasonable price. He also could be persuaded — or forced — to give up some of his equity in exchange for the debt payments. Or he may end up taking one of the most globally recognised brands that calls Nashville home to bankruptcy court.”
Eric Clapton playing the Royal Albert Hall, London in 1992. © Jill Furmanovsky
Meanwhile Bloomberg are reporting that a group of bondholders, who control over two thirds of the $375 million notes, definitely do want a restructuring. The restructuring would give them ownership of the brand and mean they could put in new leadership which would enable them to get credit.
“The holders don’t expect Gibson’s earnings will be strong enough to attract new money for a refinancing to head off a default looming later this year, and creditors are reluctant to invest more funds while Juszkiewicz is still in charge.” note Bloomberg. However Juszkiewicz, who has more than 30 years at the helm of the iconic Nashville brand, doesn’t want to give up majority control. Juszkiewicz told Bloomberg “[The bondholders are] trying to do everything possible to put the company in a worse position, and get us in a situation where they’re exclusively talking to us. But factually, we’ve made our interest payments, fulfilled our obligations, and our intent is to pay back all bondholders.”
Bob Marley performing onstage at 400 Years, Houston, Texas in 1976. © Ralph Fales
So while this locking of horns continues the future of Gibson guitars is looking troubled. And the deadline is looming to sort it all out. If nothing is resolved by 23 July 2018 it could be goodbye to one of the most famous guitar manufacturers in the world.
A manufacturer who are part of, and enabled, rock history, as many a rock star has favoured guitars made by the company, including the famous Gibson Les Paul electric guitar, with many musicians having had signature models made.
David Bowie and Mick Ronson on a train to Aberdeen in 1973 on the final Ziggy Stardust tour. © Mick Rock
Some famous Gibson Les Paul guitarists include Led Zeppelin’s Jimmy Page, Guns N’ Roses’ Slash, The Who’s Pete Townshend, Eric Clapton, Roy Orbison, the Sex Pistols’ Steve Jones, ZZ Top’s Billy Gibbons, Green Day’s Billie Joe Armstrong, Neil Young and his custom-painted Old Black, The Rolling Stones’ Ronnie Wood, Frank Zappa, Bob Marley, The Manic Street Preachers’ James Dean Bradfield, Paul McCartney, Mick Ronson (who used one on David Bowie’s Ziggy Stardust and Aladdin Sane) and Marc Bolan.
So, quite an illustrious heritage then. For the sake of that and for future musicians, let’s hope the company can be saved.
Neil Young performing onstage with Crosby, Nash, Stills & Young at Wembley Stadium in 1974. © Mick Gold
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