Another story about Gibson's financial situation

[Dave W]

From the June 17 edition webpage of Music & Sound Retailer:

Changes Coming at Gibson?

A story written by Debtwire on March 29 alleged lenders could be losing patience with Gibson. According to the story, lenders have lost patience with the guitar manufacturer because it has no independent board of directors or shareholders. Lenders allegedly want to install an independent board of directors. The only reason lenders have not tightened the screws on the company run by Henry Juszkiewicz is Gibson is "associated with high quality products and commands respect in the industry." Debtwire quoted an anonymous retailer who said: "In the guitar world, a lot of people are frustrated because they feel that [Juszkiewicz] has ruined the company because it's all about his ego, not the guitars. Gibson and Fender are two American icons...and he's running one of those."

Lenders are also said to want to control the company's spending habits. The story said Juskiewicz gave $3.5 million to equity shareholders and also swept $9.5 million into "money-losing subsidiaries at the end of 2008." Gibson, in a written statement, responded that Juszkiewicz "rescued the true American icon from the brink of bankruptcy when he acquired it in 1985; and under his strong leadership, the technology, quality, sales and profits have steadily increased over the years. Gibson is doing well and has drastically increased its market share under his insightful leadership." The story also alleged Gibson has technically eliminated independent dealers from selling its products more than five years ago when it "began forcing them to spend at least $100,000 to $150,000 on merchandise annually to remain in its supply chain, [retailers] said."

Some of this is old news, but it sounds like lenders have very little accountability and want to change that. I imagine they could put the company in receivership if there's a default, but I haven't seen any news of a default, just alarm over the long-delayed financials.

The Debtwire story isn't available to non-subscribers, so this is just a summary. And keep in mind that the Debtwire story predates the Nashville floods, which can't have helped their situation.

[uwe]

"under his insightful leadership ..."

Anybody using that phrase for his management skills even in a press blurb must have completely lost it or come from North Korea. It shows that Henry Kim Il Sungkiewicz can no longer discern between the company and himself. That is a very bad sign.

The guy has obviously achievements, in 1985 Gibson had lost its way, but 25 years heading the same entity with no control have proved too much.

[Dave W]

It's exactly the sort of statement I would expect from him.

[jumbodbassman]

Having dealt with Henry on a business basis you guys are right on.  He and his Harvard MBA shall rule the world.. just ask him.....

I had the opportunity to negotiate with Henry and use his ego against him.  I sold him the Baldwin Piano company for G E back in late 2001.  Not to get too technical on what bankruptcy laws are in the US but I knew he really wanted the Baldwin company. He had made several runs at it prioir to the bankrupcy of Baldwin.  He bid for it in bankrupct court but not enough for me to get my loan repaid in full.  so i credit bid (bid my actual loan for the company versus what he and others wanted to pay).   I then literally cut a deal with Henry 20 minutes later to sell him the company for what i needed to get my loan paidoff.  Catch was i had to finance him so HJ became a customer.  Over the next few years I  got him to put well over 20MM of Gibson's money into keeping Baldwin afloat because he can't admit he is ever wrong....  Got paid out by Bank America several years later.  I will say that Henry can be charming and entertaining especially when telling Zayck stories.  He is miserable on his employees...

[Dave W]

Interesting story.

When he sold the Trace Elliot name (and maybe certain assets) to Peavey that was sort of admitting defeat.

[eb2]

They owned Orange Amps for a bit too.

I hope they are keeping the bottom bunk in Tom Petter's cell open.

[Dave W]

Petters will have company soon enough when all his associates who pleaded guilty get sentenced.

Let's hope there's nothing more than mismanagement at Gibson. I'm not aware of any fraud allegations. OTOH continuing to stonewall about the audited financial statements is not a good sign.