Guitar maker Gibson is rapidly running out of time to resolve debt issues and could be facing bankruptcy, according to reports.
Last week, Nashville Post reported that CFO Bill Lawrence left the company after less than a year on the job and just six months before $375 million of senior secured notes will mature.
Gibson, which has annual revenues of more than $1 billion, has another $145 million in bank loans that will be due immediately if those senior secured notes are not refinanced by July 23rd.
“Less than six months out from those crucial deadlines, the prospects for an orderly refinancing are slim,” said the publication. “And the alternative scenarios look likely to sideline long-time owner and CEO Henry Juszkiewicz.”
Juszkiewicz faces a limited amount of time to decide whether to exchange the debt, attempt to pay it off using his equity, or try to declare the company bankrupt.
“This year is critical and they are running out of time – rapidly,” senior credit officer at Moody’s Investor Services Kevin Cassidy told Nashville Post. “If this ends in bankruptcy, he will give up the entire company.”
Cassidy suggested that some type of restructuring will be necessary, saying that the core business is “very stable, and a sustainable one. But you have a balance sheet problem and an operational problem”.
Towards the end of last week, Gibson issued a statement revealing that an “ongoing streamlining strategy” would soon help it record the best financial results the company has seen in its history within the next year.
The firm also said it would be able to pay back its debt in whole within seven years.