The company, which is behind one of the most iconic guitars in music history, the Les Paul, recently saw the departure of its chief financial offer, Bill Lawrence. His leaving is seen as a bad omen for the company “as $375 million in senior secured notes mature and $145 million in bank loans become due, if they aren’t refinanced by July.” Gibson also recently moved out of its Nashville warehouse, which it had called home for over three decades.
At the moment, company owner Henry Juskiewicz is attempting get things in order financially, “but is facing a battle with creditors over bad business decisions.” Gibson is hoping that its acquisitions of various electronic companies over the years will soon provide a much needed influx of funds.
Founded back in 1902 in Kalamazoo, Michigan, Gibson is estimated to pull in $1 billion a year in revenues. The Les Paul, designed by the legendary guitarist himself, first went into production in 1952, and has since been used by musicians like Jimmy Page, Ace Frehley, Eric Clapton, Joe Perry, Bob Marley, and Slash. Other famous guitars from Gibson include the Firebird and the Flying V.
Update: An official statement from Gibson today assures that it is in the process of finding a solution to its bankruptcy problem. Gibson “has met all current obligations to the bondholders, is in the process of arranging a new credit facility to replace the bonds, and fully expects the bonds to be refinanced in the ordinary course of business,” it reads. “These bonds expire as all fixed income instruments do at the end of their term,” Juszkiewicz adds.
He also notes that the company has been working to monetize its assets. “We have been monetizing assets like stock holdings, real property and business segments that could not achieve the level of success we expected. By monetizing these assets, we can reduce debt and generate funds to contribute to business segments that are thriving. It is important to our business to get back to the financial success we had to achieve the best financial terms in the refinancing of our company.”