The future of Gibson, the historic US manufacturer of guitars and other musical instruments, is at risk. According to the financial analysis of the Nashville Post newspaper, the picture is really worrying: too many debts to repay and obligations to settle.
Although Gibson has annual revenues of over $375 billion, it was faced with maturing obligations of over $145 million. According to many analysts, part of the difficulty derives from the numerous investments and acquisitions carried out by Gibson in sectors other than musical instruments (Pioneer and Philips Audio, for example). The debt position is far from rosy: there are loans with credit institutions for 23 million dollars which will come due if they are not refinanced by next July XNUMXrd. Director Bill Lawrence has decided to leave his position after only one year, demonstrating the criticality of the situation.
However, this is not a bolt from the blue. In early 2017 Gibson received an emergency loan of 130 million dollars, an operation that has started to make investors worried. In 2016, Moody's had downgraded the company's stock to the CAA2 category, i.e. "poor quality and high investment risk". Gibson then announced a 60% staff cut at Gibson Innovation.
The company that made the likes of Elvis, John Lennon, Jimi Hendrix, Eric Clapton and Santana play is in danger of disappearing, despite its global popularity. The legendary "Les Paul" has become the electric guitar par excellence over the years.
"We are currently monetizing underperforming assets such as stocks, real estate and business segments," said Henry Juszkiewicz, Gibson's chief executive officer. "With this operation we will be able to reduce debt and generate funds to be assigned to those business segments that are functioning instead". According to the CEO, the company will recover and continue to grow. However, the decline in guitar sales is a fact: in the last ten years, in the United States, guitars have gone from one and a half million to just one million sold per year.
The Michigan company founded in 1902 represents a fundamental piece in the history of world rock music. All the greatest bands of all time have brought Gibson guitars on their tours, from the Sex Pistols to Led Zeppelin, from Guns N' Roses to the Who.
There are now three alternatives for Gibson: sell part of the capital by finding investors willing to continue the company, renegotiate debts or, worst case scenario, open bankruptcy proceedings.
