FEB. 14 I GIBSON BRANDS I COMPANY
Gibson Faces Financial Challenges
Gibson Brands is facing debt deadlines and is "running out of time," according to an article published by the Nashville Post on Feb. 9.
On Feb. 2, Gibson released a statement that the company made a $16.6 million coupon payment to holders of its $375 million, 8.875 percent senior secured notes due 2018.
According to the Nashville Post article written by Geert De Lombaerde, Gibson's statement suggests that the company is fulfilling its commitments, however, the situation is "far from normal."
"[Chief Financial Officer] Bill Lawrence recently left the company after less than a year on the job and just six months before $375 million of senior secured notes will mature," the Post reported. "On top of that, another $145 million in bank loans will come due immediately if those notes, issued in 2013, are not refinanced by July 23.
"Less than six months out from those crucial deadlines, the prospects for an orderly refinancing — Gibson has hired investment bank Jefferies to help with that — look slim, observers say. And the alternative scenarios look likely to sideline longtime owner and CEO Henry Juszkiewicz."
"At the end of the day, someone will take control of this company — be it the debtors or the bondholders," Debtwire reporter Reshmi Basu told the Post. "This has been a long time coming."
Kevin Cassidy, a senior credit officer for Moody's Investors Service, told the Post that Juszkiewicz had three options: Negotiate an exchange of the debt coming due for new notes, which could be difficult to do; Juszkiewicz could give up equity in exchange for the debt payments; Or, take Gibson into bankruptcy court.
"This year is critical and they are running out of time — rapidly," Cassidy said. "And if this ends in bankruptcy, he will give up the entire company."
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