Iconic guitar company Gibson is facing bankruptcy, according to a reports by the Nashville Post.

GIBSON GUITAR COMPANY FACING BANKRUPTCY

Gibson takes in annual revenues of more than $1 billion, but is now less than six months away from $375 million of senior secured notes hitting maturity, and another $145 million in due bank loans if those notes are not refinanced by the end of July. Gibson CEO Henry Juszkiewicz confirmed that the company is planning to replace the bonds.

“While the musical instrument and pro audio segments have been profitable and growing, they are still below the level of success we saw several years ago,” he said in a statement. “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… 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.”

Despite Juszkiewicz’s words, the Post cited inside sources that assert that the company has bleak prospects surrounding the refinancing it needs. In addition, Gibson’s CFO, Bill Lawrence, left the company just six months after taking on the role. Benson Woo, who had previously worked at Gibson in 2016, will return to fill the position.

“We are excited and pleased that Benson with be coming back to the Gibson Brands family,” Juszkiewicz said. “He has a great knowledge of the industry, our current businesses and is liked and respected by everyone at Gibson and with whom he dealt. We are confident he will contribute to moving the company forward.”

Many speculate that Juszkiewicz must decide whether to exchange Gibson’s debt, pay it off with equity or to declare bankruptcy. The CEO’s statement gives a sense of hope, and states that the company is undergoing a streamlining strategy, and that their hired investment bank, Jeffries, will be able to pay back the company’s debt entirely within seven years.

Gibson was founded in Kalamazoo, Michigan, in 1902 and designed the world famous Les Paul guitar, designed by the guitarist himself in 1952. The company is also responsible for the Flying V guitar. After three decades, the company has decided to close its warehouse in Nashville to help with financial matters.

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