Dire financial situation at Gibson?

[uwe]

Introducing: Anniversary 'Black Hardware Only' Reissues!

[Dave W]

I was rubbing my eyes at their - claimed by them, doubted by the investors - earnings before interest, taxes, depreciation and amortization with all one-off positive and negative effects not taken into account (adjusted EBITDA) of only US-$ 60.0-$65.0 million  . They are hardly a large or even medium-size business then, more a cottage industry. Somehow (without ever giving too much thought to it), I had expected them to push a much more substantial operative result wave (even if large parts of that are subsequently eaten by interest payments).

So it's not so much whether anybody could afford Gibson as it is the question who might be at all interested. Not really something that wets a financial investor's appetite - they would be underneath the radar of many private equity companies. They will either have to find a very rich investment banker who "always wanted to own a guitar company" or someone from the instrument industry will have to play the white knight and see the Gibson brand as something to enhance his portfolio with.

KKR is one of the biggest private equity companies, and they are obviously interested, even with Gibson's doubtful claims. The problem is that Henry and Berryman won't accept their proposed terms -- at least yet. I can't see a smaller firm pulling it off at terms more favorable to Henry. Yamaha is probably the only MI industry firm able to top whatever KKR wants, and I can't see them offering better terms.

[slinkp]

I mean it's pretty obvious at this point Gibson is not going to be able to be choosy.

[Dave W]

This just in -- Henry has accepted a new position elsewhere. 

[uwe]

Joke? I couldn't find anything on the internet.

In any case, Henry's own statements begin to sound a bit farewell'ish in my ears:

https://www.theindustryobserver.com.au/gibson-ceo-blames-himself-companys-status/

“No, it wasn’t a great decision,” Henry Juszkiewicz confessed. “It didn’t work out very well. I think it was a rational decision, but it turned out to be a very poor decision, and it’s a decision I made. It is what it is.”

“It is accurate to say bankruptcy is a possibility in the sense that our bonds expire,” Juszkiewicz said, noting that while Gibson are in talks of refinancing, the bondholders that are owed money aren’t terribly focused on being repaid. “They are more interested in owning the company,” he said. “That’s an ownership play.”

While Gibson’s future will become clear on August 1st, when much of their debt is due, Juszkiewicz concedes that if he wishes for his long-terms plans for the company to continue, he will “have to pass the baton to someone who also has that dream.”

“Part of this is evaluating financing options, and I have to look at what is best for the company, all of the stakeholders and myself.”


I think we can stop kicking the down(ed) man now.

[westen44]

A tone or note of finality.  The answer will be known soon enough. 

[Rob]

It certainly had that sad, sad flavor.

[Pilgrim]

Henry says "that's an ownership play."

Sounds like a reasonable prediction of the future to me.

[Dave W]

Joke? I couldn't find anything on the internet.

...

I post a pic of Henry as a Wal-Mart greeter and you think I might be serious?

[uwe]

I'm innocent for once! Pictures hosted on social networks are no longer viewable on my office desktop - so I didn't even see that there was something for me to see I couldn't see due to our restrictions. If that makes sense. Only saw the pic now on my BB.

[Barklessdog]

Zee iron curtain has descended at work?

You own the place don’t you?

Gibson will not die, it’s not like TRU that was bought by an investment group to saddle billions of dollars of dept on them?

China will probably buy them?

At least I bet they will try to go after the bass market yet again?

[Dave W]

....
Gibson will not die, it’s not like TRU that was bought by an investment group to saddle billions of dollars of dept on them?

China will probably buy them?

At least I bet they will try to go after the bass market yet again?

Not like TRU in that respect, but Henry has saddled the company with hundreds of millions of debt buying electronics companies like Philips/Woox and Onkyo, and overpaying for them, trying to become a lifestyle company. The core guitar business is profitable. Just not profitable to cover the additional debt he took on buying non-guitar companies.

I predict KKR will get its way and take controlling interest in a debt-for-equity swap. They'll force Henry into it after he exhausts his search for all new financing. It won't involve foreign ownership.

Bass market? We can only hope.

[Dave W]

Another take on Gibson's press release: Options Narrowing as Gibson & KKR Talks Fail

The result of the talks, summed up in one sentence: Juszkiewicz Wanted More Money to Exit, KKR Didn’t Bite.

[Barklessdog]

Tobias did not pan out huh?

It could the whole millennial thing?

Have to blame them for all our woes?

I read about the demise of old fart toys of our generation are not endearing to new generations. Harley’s, Corvettes, all too expensive for our broke basement video game coffee serving generation.

Gibson’s are certianly pricey, but there are epiphones?

Just poor management it looks like.

[Rob]

Another take on Gibson's press release: Options Narrowing as Gibson & KKR Talks Fail

The result of the talks, summed up in one sentence: Juszkiewicz Wanted More Money to Exit, KKR Didn’t Bite.

That statement is both the question and the answer.
He's scraping his best deal before he submerges.