Gibson Brands, Inc. - parent company of Gibson Guitars - is facing an uncertain future due to serious debt-related and operational concerns.

The company must soon address upcoming repayments of senior secured notes totaling $375 million, with an additional $145 million due if the first amount is not resolved by July 23. Last week, Debtwire reporter Reshimi 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.” Further Kevin Cassidy, a senior credit officer at Moody’s Investment Service, noted to the Post that Gibson Brands owner and CEO Henry Juszkiewicz, “essentially has just three options: He and his team could negotiate an exchange of their debt coming due with new notes, which may not be feasible at a reasonable price; He could also be persuaded – or forced – to give up some of his equity in exchange for the debt payments; or he may end up taking one of the most globally recognized brands… to bankruptcy court.”

The past few months have been notable for Gibson Brands – which has annual revenues of more than $1 billion – in a number of ways. Last summer, the company’s debt rating was downgraded, after less than a year on the job CFO Bill Lawrence left recently, Gibson sold a former Baldwin Piano warehouse in Nashville, in late October of 2017 the company announced that its Memphis-based guitar manufacturing division would move to a new facility, and in January Gibson was a notable no-show at the recent NAMM Show in Anaheim, California.

“This year is critical and they are running out of time,” Cassidy told the Post. Some type of restructuring will be necessary. The core business is a very stable business, and a sustainable one. But you have a balance sheet problem and an operational problem.”

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