Gibson Brands struggling with debt, could face bankruptcy - WSMV News 4

Gibson Brands struggling with debt, could face bankruptcy

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NASHVILLE, TN (WSMV) -

Gibson, the iconic maker of guitars, has been a part of Music City for decades. The company's world headquarters is here, and their factories in Nashville and Memphis employ hundreds of people. 

But over the years, the company has expanded into products that haven't performed well. Debt has mounted, and now, according to some reports, the company is near bankruptcy.

Gibson maintains they are meeting all their obligations, but with hundreds of millions of dollars in bonds and bank loans due in July, its a race against the clock.

The quality sound of a Gibson guitar has resonated with musicians in all genres of music. 

Nolan Lucas has sold countless guitars to music industry legends at Corner Music on 12th Ave. South in Nashville. 

The store is one of only a handful of stores Gibson designates as a five-star dealer. They sell Gibson's not found anywhere else. 

"All the great players, be it country, rock'n'roll, jazz, blues, they all played Gibson's," said Lucas. "Dylan, Jimmy Page, Slash, you name it."  

Gibson's roots in Music City run deep.

"Most players own a Gibson, know someone currently working for Gibson, or [who] worked for Gibson in the past," explained Lucas. "So everyone has a connection in some way to the company."

But Gibson quality comes with a price.

"This one hanging on the wall, the street price is $5,049," Lucas said.

Lucas, holding Gibson's Hummingbird model, says a Gibson guitar is expensive. Its cheapest model cost $1700, but he adds, it's like a fine wine that ages well.

"It's one solid piece of wood," Lucas explains. "It's going to age differently. It's going to resonate differently. It will produce a much richer sound you won't be able to achieve with a laminate guitar."

Many believe that Gibson has been kicking the financial can down the road too many years, and should concentrate on their core business, making premium guitars. 

"I personally think they have ventured out, branched out too many times," said Lucas. "They should get back to being a guitar company doing what they have always done so well."

In a statement released Monday, Gibson Chairman and CEO Henry Juszkiewicz said, in part:

Mr. Juszkiewicz said that the company is concluding a thorough strategic and budget planning process to identify those areas where it can maximize its investments, and pare back areas where investments have not been performing to expectation. 

"We have been monetizing assets like stock holdings, real property and business segments that could not achieve the level of success we expected.  By monetizing these assets, we can reduce debt and generate funds to contribute to business segments that are thriving.  It is important to our business to get back to the financial success we had to achieve the best financial terms in the refinancing of our company," he stated.

He said the company is working hard to improve results to ensure the refinancing is completed with best pricing and terms.

 "With the refinancing and the improvement in operating performance from the actions that we are rolling out, we expect the company to be organized for success and growth for years to come" Mr. Juszkiewicz said.

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