Gibson possibly facing bankruptcy

[Eric Cantona]

https://liveforlivemusic.com/news/gibson-guitars-debt/

"Gibson has been one of the world’s leading manufacturers of electric guitars for years. Throughout their century of existence, countless musicians–from famous rock stars to local barroom heroes–have used Gibson guitars to create the soundtrack to our world. However, according to various recent reports, Gibson has fallen on particularly tough times financially and could face imminent bankruptcy. The company has faced declining sales for years, several large loan debts are about to come due.

Explains The Nashville Post, “The situation facing the iconic Nashville-based music instrument maker, which has annual revenues of more than $1 billion, is far from normal. 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 immediately if those notes, issued in 2013, are not refinanced by July 23rd…”

As Debtwire reporter Reshmi Basu told the Nashville Post, “At the end of the day, someone will take control of this company — be it the debtors or the bondholders…This has been a long time coming.” Digital Music News notes, Gibson still pulls annual revenues north of $1 billion. But their revenue does not come close to covering their loan debts, and sales have been falling each successive year. Multiple investors, bondholders, and analysts are now talking bankruptcy.

A senior credit officer from Moody’s Investors Service told the Digital Music News, “This year is critical and they are running out of time — rapidly–and if this ends in bankruptcy, [CEO/owner Henry Juszkiewicz] will give up the entire company.” They also note that Moody’s, who ranks companies’ viability for investors, has already downgraded Gibson’s status, just as they did with the similarly struggling Guitar Center last year.

Various factors may be affecting the shrinking electric guitar market. Some feel it’s a result of a shift in the music zeitgeist away from guitar-driven music and toward more digitally-produced styles like EDM and hip-hop. Others speculate that the increased durability and decreased prices–while great for those looking to buy and sell used gear–have begun to cripple the company’s ability to sell new instruments.

Here’s hoping that Gibson can figure out their financial issues and stay afloat. If you feel strongly about the company’s dire straits, you can go to their website and buy a new Gibson today. Otherwise, you can go check out their instruments in actionwherever music is played and hope for the best."

[ZoSoRose]

Keep Nashville and Bozeman open, dump most of senior leadership (Henry), vastly consolidate product line and increase QC, lower prices

[James Bond]

1 hour ago, ZoSoRose said:

Keep Nashville and Bozeman open, dump most of senior leadership (Henry), vastly consolidate product line and increase QC, lower prices

This.

I doubt the brand will ever truly disappear but it's time for a massive overhaul.

[AxlisOld]

^Both of these. My first thought was, good, fuck em. Use real ebony on a 3,000 dollar guitar, assholes. If other companies can responsibly source, so can you. Use real MOP, assholes. Check your fucking QC, assholes.

I remember talking with the old owner of my local guitar shop when they decided to stop carrying Gibbies. He said they as a company were just too big a pain in the ass to deal with. Gibson has to realize they aren't the big kid on the playground anymore, they can't just do whatever they want because people have choices now for archtop humbucker guitars.

[Gibson87]

On 3/2/2018 at 1:13 PM, AxlisOld said:

I remember talking with the old owner of my local guitar shop when they decided to stop carrying Gibbies. He said they as a company were just too big a pain in the ass to deal with.

Same for my local guitar shop. He carries almost everything except Gibsons. The only time he'll sell one is if a customer sells theirs to the shop

[James Bond]

Maybe it's different with the Canadian Gibson distributer (Yorkville) but I hear the opposite - the main guy I deal with at my local shop says that Gibson is far more transparent with dealings then Fender. Of the big two, anyways.

[SoundOfAGun]

I had a chat with a guy at a music store in my city, they said if you stock Gibson, they decide what models you are going to have. The retailer gets no choice in what stick they receive. Not sure how true it is, but it always struck me as a shitty distribution method.

[James Bond]

12 hours ago, SoundOfAGun said:

I had a chat with a guy at a music store in my city, they said if you stock Gibson, they decide what models you are going to have. The retailer gets no choice in what stick they receive. Not sure how true it is, but it always struck me as a shitty distribution method.

I wonder how much it varies, because he basically told me that if it's a special order for something they don't have in stock, Gibson is infinitely more efficient at processing the order than Fender. But again, maybe the Canadian distributer absorbs the bullshit so by the time the guitars actually reach stores there are no problems.

[classicrawker]

Would be a damn shame if Gibson ends up just being a brand name for some Far East Company spitting out cheap guitars but would be surprised if somebody did not end up buying the assets if it were to go insolvent and possibly shrinking the company.........The brand name is very valuable so hopefully it stays American with new ownership who have a passion for making fine instruments.........

I have a 2000 Les Paul Raw Power Natural finish  I bought used  about 10 years ago and love that guitar but there are some minor finishing issues I noticed, like the inlay of the binding on the neck, that don't effect play-ability and you would never notice unless you were looking for them but you should never see that kind of shoddy workmanship on a $2-3K guitar

 

Edited March 6, 2018 by classicrawker

[James Bond]

9 minutes ago, classicrawker said:

Would be a damn shame if Gibson ends up just being a brand name for some Far East Company spitting out cheap guitars but would be surprised if somebody did not end up buying the assets if it were to go insolvent and possibly shrinking the company.........The brand name is very valuable so hopefully it stays American with new ownership who have a passion for making fine instruments.........

I have a 2000 Les Paul Raw Power Natural finish  I bought used  about 10 years ago and love that guitar but there are some minor finishing issues I noticed, like the inlay of the binding on the neck, that don't effect play-ability and you would never notice unless you were looking for them but you should never see that kind of shoddy workmanship on a $2-3K guitar

 

I knew what I was getting myself into but nevertheless my SG Custom had a crackling pickup selector switch and bump in the neck right out of the box - and that's from the Custom Shop. I had both of those problems immediately fixed for free by my local tech but still, those are things that shouldn't leave the factory that way especially for a Custom model and that already overpriced price point.

I do sincerely hope that the brand name stays in American hands and they just shrink it down to offering fewer numbers of models at better prices.

[SoundOfAGun]

The binding on my les paul has a line about 2 mm below it around most of the body and the finish had started to sink in to the lines in th wood as it is an ebony finish. Looks fucking cool, but I bought mine way back when it cost £1100 for a standard; there is no chance I would pay asking for a Gibson in 2018 with their current build quality.

[soon]

GIBSON LAYS OFF CUSTOM SHOP WORKERS

The Gibson guitar company's problems are escalating, just weeks after experts said it was "running out of time" to resolve its debt issues. The latest reports claim that the guitar maker's Custom Shop is now sending workers home.

According to the Dayton Daily News, Standard & Poor's – the financial research firm that analyzes stocks – has downgraded the company. “With multiple maturities looming and operating weakness ongoing, we believe Nashville-based Gibson Brands could default on its debt obligations,” Standard & Poor’s wrote to clients. “We are lowering our corporate credit rating to ‘CCC-’ from ‘CCC’.”

This latest bad news for the company comes after Standard & Poor's noted that there is an “increased likelihood” that this "default or restructuring event" could happen sometime within the next six months. Meanwhile, the Nashville Post reports that Gibson laid off approximately 15 employees from its Custom Shop, which was founded 20 years ago, employs about 100 people and manufactures replicas of vintage guitars and other special instrument orders.

The company owes an equity firm $375 million, with an additional $145 million due if the first amount is not repaid by July 23. Gibson’s electronics operations have been in a sales slump over the past few years, which many experts see as the root of the company's problems.

The company's CEO and majority shareholder, Henry Juszkiewicz, recently placed the blame on stores where the guitars are exclusively sold, since Gibson doesn't sell its guitars online.

"They're all afraid of e-commerce, with Amazon just becoming the second largest employer in the U.S., and the brick and mortar guys are just panicking," he told Billboard. "They see the trend, and that trend isn't taking them to a good place, and they're all wondering if there will be a world for brick and mortar stores for much longer. It’s a turbulent world to be a retailer, and many of our retail partners are facing that same issue.”

Juszkiewicz told the Nashville Post that the new staff cuts are “part of broad initiative throughout the company to prepare for our refinancing.”

http://ultimateclassicrock.com/gibson-lay-off-workers/

[James Bond]

1) Sell off all the stupid extra brands that have nothing to do with guitars.

2) Focus on guitars again.

3) Condense the line-up of new guitars.

4) Decrease prices. A Les Paul Studio should not be pushing $2000 after taxes - fuck right off.

5) Fix the ugly ass new SG shape. Someone who wants the original 60s curvature shouldn't have to pay the absurd VOS and/or Custom Shop pricing (okay, this is a very personal gripe of mine).

6) Focus on guitars again.

7) Did I mention they should focus on guitars?

Seriously, condense the line-up to only the best of the best and decrease the prices to make the most popular models affordable to the average consumer.

[classicrawker]

Done deal....bankruptcy filed 

[Eric Cantona]

6 hours ago, classicrawker said:

Done deal....bankruptcy filed