by RogerF » 05 Mar 2018, 22:30
The bankruptcy problem with Gibson has relatively little to do with the guitar business. No matter how much we deplore what Henry J has done to staff motivation, dealer networks, QC and plain arrogant ignorance of the people who actually buy their guitars, their current bankruptcy problem lies elsewhere.
The Gibson guitar business is still probably profit-making but what is killing Gibson's status is the fact that Henry J's megelomania sent him out into the world buying up a whole load of companies on borrowed money. Unfortunately for Henry, these acquisitions turned out to be less profitable (in some cases not profiatable at all) and this summer Gibson has to come up with serious mega dollars to pay back the loans and bond holders who financed these acquisitions - it is almost certain that Gibson will be unable to pay off the debt due. Many investors are actually saying they want to see Henry go as CEO before agreeing any re-financing of the debt.
The only good thing is that it probably means the end of the road for Henry at Gibson so let's hope whoever takes over as CEO knows what they're doing and can turn both the guitar business and the other acquisitions around.