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I really, really hope this will be the end of HenryJ at Gibson and the start of something new and sustainable.
He and his team could negotiate an exchange of their debt coming due for new notes, which may not be feasible at a reasonable price. He also could be persuaded — or forced — to give up some of his equity in exchange for the debt payments. Or he may end up taking one of the most globally recognized brands that calls Nashville home to bankruptcy court.
Just a hunch, based on Henry's stubbornness, is he will take the bankruptcy option - If he gives up any equity in exchange of debt, then his 'backers' will certainly not want him at the helm - Do the 'backers' even want to own/run the business ? - So chances are they would look to bring in new partners/investors as soon as possible
Interesting few months ahead
The quote from the Moody's guy in the last paragraph is quite informative:
“Some type of restructuring will be necessary,” Cassidy said. “The core business is a very stable business, and a sustainable one. But you have a balance sheet problem and an operational problem.”
Someone will take on the guitar side of the business at the end of this.
Yes, I accept that there have been some issues of late plus some ill-judged new projects. The pricing structure (model year etc) is daft and not working. The financial mess isn't going to be solved by the current structure or strategic model. However, I do feel some of the comments toward Henry are unkind, unwarranted and unnecessary... there will be a lot of other people helping him make these decisions, and they are equally guilty. Lets not make this personal, chaps...
I think it is the nature of the beast personally.
So many guitars being churned out........ to a shrinking audience.
Better they sell out to a new owner who is interested in guitars...
Feedback
Did Gibson "need" to do this or is it just standard business practice for growth?
Maybe PRS, maybe someone else.
The point is that Gibson can’t go on in its current form, and Henry has been trying to follow a tech-industry model of constant innovation and big acquisitions to grow the business, but that just isn’t how the guitar market works.
It would be interesting to know the UK sales trends of brand like Gibson post-thevotethoushaltnotspeakof....
I'm not locked in here with you, you are locked in here with me.