Gibson Brands Inc. recently made headlines over speculations that the company is on the verge of bankruptcy. A representative from the company said that they have already met all their financial obligations.
Last week, one publication revealed that the iconic guitar maker is less than six months away from $375 million of senior secured notes reaching maturity. The company also had to settle $145 million in bank loans.
Bill Lawrence, the company's former chief financial officer, also left Gibson Brands Inc. after just six months on the job. Henry Juszkiewicz, the longtime owner and CEO of Gibson Brands Inc., released a statement regarding the issue.
"These bonds expire as all fixed income instruments do at the end of their term. While the musical instrument and pro audio segments have been profitable and growing, they are still below the level of success we saw several years ago," said Juszkiewicz.
The CEO of the company also said that they are trying to focus their resources on products that are profitable for the brand. Products that have not been performing as well as the company expected will be eliminated. Juszkiewicz hopes that his bold move will help lead the company to the best financial results.
Kevin Cassidy, a senior credit officer at Moody's Investors Service, said that Juszkiewicz can save his company from bankruptcy by giving up some of his equity in exchange for debt payments. He said that 2018 is critical for the company because it is already running out of time. If Gibson Brands Inc. will eventually claim bankruptcy, the owner would have to give up the entire company.
Gibson Brands Inc. Adapts To Modern Times
Gibson Brands Inc. was founded in 1902 in Kalamazoo, Michigan. Juszkiewicz became the CEO of the company in 1992. Last year, one publication said that Gibson Brands Inc. generates about $3 billion in annual revenue.
While speaking with the publication, the company CEO also explained his desire to include modern technology on a broad range of the company's guitar models. However, this did not sit well with some of his more traditional clients.
"Technology is a wonderful thing. But technology doesn't always sit well with consumers, mostly because there's not enough marketing dollars to let everybody know what it's all about," said Juszkiewicz.
Some of the musicians who used Gibson Brands Inc. guitars include Bob Marley, Jimmy Page, Billy Gibbons, Zakk Wylde, Randy Rhoads, and more.