MARCH 8 I GIBSON BRANDS I COMPANY
Gibson Rating Downgraded,
Lays Off Workers

Standard & Poor's downgraded Gibson Brands corporate credit rating. In a report released Feb. 21, the rating action "reflects the increased likelihood that Gibson Brands could experience a near-term liquidity shortfall and default on its debt if lenders choose to accelerate debt payments ... The outlook is negative."

S&P lowered Gibson's corporate credit rating to CCC-minus from CCC. Concurrently, S&P lowered Gibson's issue-level rating on the company's senior secured notes due Aug. 1, 2018, to CCC-minus from CCC. The recovery rating remains '4,' indicating S&P's expectation of an average (30-50 percent; rounded estimate 30 percent) recovery in the event of payment default.

"With multiple maturities looming and operating weakness ongoing, we believe Nashville-based Gibson Brands could default on its debt
obligations over the next six months," said S&P in a report from primary credit analyst Francis Cusimano Jr. "The company's operating performance continues to be weak as it works through the lingering effects of the early 2017 implementation of rosewood regulations under the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), as well as reduced pay terms from suppliers."

On Feb. 27, the Nashville Post reported that Gibson has laid off more than 15 custom shop workers at its Nashville plant. Gibson CEO Henry Juszkiewicz told the Post that the cuts are "part of a broad initiative throughout the company to prepare for our refinancing."

Total debt outstanding as of Dec. 31, 2017, was $519 million, according to S&P.