Gibson files for bankruptcy

[Jim Soloway]

There's also the fact that KKR doesn't have a history of parasitic raiding. Over the decades, their strategy has always seemed to be to return the purchase to profitability so that they can maximize resale value when they decide to get out.

I don't see this as raiding and I'm not sure it's appropriate to think of it as a purchase. It's more like a repo from a delinquent and recalcitrant borrower. Given that this doesn't seem to be a position of their own choosing, I would expect them to do whatever their research indicates is in their own best interest and given the state of the guitar industry, that may mean whatever reduces their loses the most.

[Bach5G]

I’ve watched a trombone maker (Shires - I also play trombone) go through this process not too long ago. Shires had difficulties after the financial crisis and got behind on gov’t remittances and health care premiums. It ended up borrowing from Eastman (the Chinese instrument manufacturer). Shires still had difficulties, went through a bankruptcy reorg in which Eastman took over the company. Now, two or three years later, Shires is still in business, albeit as a subsidiary of Eastman (along with Powell flutes and Backun clarinets). It recently moved into new premises (still near Boston) and had a factory tour. You can still buy Shires trombones, from horns built entirely in the US to horns built in China using Shires designs. I haven’t heard any complaints about quality.

With Gibson, I’d expect the Teac, Onkyo and other questionable acquisitions would be sold (if they have any value). Some creditors will likely take a haircut. Through sales of assets and reorganization, the debt will be brought down to a level that can be serviced by the core guitar business. At that point, Gibson may look attractive to prospective ourchasers who think they can grow the business.

[goldenwave77]

[QUOTE=Bach5G;869513]. Through sales of assets and reorganization, the debt will be brought down to a level that can be serviced by the core guitar business. At that point, Gibson may look attractive to prospective ourchasers who think they can grow the business.[/QUOTE]

The debt will be gone....wiped out...erased.

As soon as the reorg. plan is confirmed, the bondholders or lenders debt is deemed cancelled, and the lenders will get stock certificates in their place. They will take a writedown of the debt, that is wiped off....maybe offset by a new entry for the new asset they receive in its place---their stock ownership.

The only debt will be the new money borrowed (the $121 M). This is basically a working capital infusion, it looks like. So, re-orged Gibson will not be overleveraged.

It's as if a bank lent against a property that was uninsured, and then a fire destroyed the bldg. The bank might foreclose and end up with the bldg. lot, and whatever is left of the bldg., but the debt is written off, and a new asset (OREO---"Other Real Estate Owned") replaces it.

Someone mentioned KKR. The law firm I originally worked for had George Roberts as one of its old time name partners. I believe there was a family connection, and I also believe Cliff Roberts, the longtime President of Augusta National Golf Club, is part of that family, too. The Masters is one of the most successful sporting shows of the year...it has tremendous worldwide TV coverage, built up over many years...in one week, they make enough $ to support themselves, and then some.

So the KKR people are pretty smart operators. I don't think they'll do anything rash.

[Doctor Jeff]

Yet another view from the trenches:

Why Orville Gibson’s hometown guitar dealer dropped the brand | News, Sports, Jobs - Adirondack Daily Enterprise

[citizenk74]

Yet another view from the trenches:

Why Orville Gibson’s hometown guitar dealer dropped the brand | News, Sports, Jobs - Adirondack Daily Enterprise

This jibes with the discussions I've had with the very long-standing Gibson dealer in my sector from whom I got my ES-175 and Es-137 and the original source of my mid-'60s ES-345 (and probably the lion's share of the pre-owned instruments I've had), as well as a couple of Martins and a slew of odds & ends. "Pain in the..." comes up a lot. It's sad. I truly hope the new arrangements can salvage the guitar making tradition of the Big G.

[TKO]

Nothing more to say than that I hope Gibson guitars survive, and come back with a bang. Too many great instrument brands have gone under already.


J. Bonamassa as a consultant wouldn't be a bad idea.
a) He's a complete guitar geek, he can say where the QC sucks and why from..
b) ..a musicians perspective. Even though he has a suit, he wears it on stage. Often.