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“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 (Gibson CEO Henry) Juszkiewicz is still in charge, the people said,” according to Bloomberg.
Credit: DaytonDailyNews
The sources for the story apparently asked to remain unnamed. The debtholders claim to control some two-thirds of Gibson’s outstanding debt, notes that come due in August.
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Gibson is the maker of some of the most enduringly classic electric guitars, including the Les Paul, the ES-335, the SG and many others.
But while some observers have said that Gibson’s core guitar business is sound, numerous brands that fall under the Gibson corporate umbrella may be weighing the company down.
Juszkiewicz is said to be working with Jeffries Group LLC on a refinancing package to address debt.
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In all, Gibson is said to be facing some $520 million in debt that is approaching maturity.
Some investors are “not looking to get paid back and get interest, but have other intentions that are not necessarily my intentions,” Juszkiewicz, 64, told Bloomberg News last month.
Juszkiewicz bought Gibson in 1986 with a group of investors and moved the company from Michigan to Nashville, Tenn.
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