New Gibson press releases on financial situation

[BigKahune]

.

There's a Lounge post linking a Music Radar article: Gibson [Henry] responds to bankruptcy reports, claiming new strategy “will lead to the best financial results the company has seen in its history.

 

Then a forum Administrator posted links to official Gibson press releases on the subject:

 

. . Gibson Brands In Process of Refinancing of Company's Bonds

 

. . Gibson Brands Hires Benson Woo as Chief Financial Officer

 

 

.

[Hogeye]

.

There's a Lounge post linking a Music Radar article: Gibson [Henry] responds to bankruptcy reports, claiming new strategy “will lead to the best financial results the company has seen in its history.

 

Then a forum Administrator posted links to official Gibson press releases on the subject:

 

. . Gibson Brands In Process of Refinancing of Company's Bonds

 

. . Gibson Brands Hires Benson Woo as Chief Financial Officer

 

 

.

 

Go Henry!

[Black Dog]

Go Henry!

 

 

 

 

[EuroAussie]

Sounds desperate to me. Interpretation: were are putting a band aid on a massive wound, bet we'll be just fine .....

[sparquelito]

Time to simplify their product lines, in my opinion.

 

[QuestionMark]

.

There's a Lounge post linking a Music Radar article: Gibson [Henry] responds to bankruptcy reports, claiming new strategy “will lead to the best financial results the company has seen in its history.

 

Then a forum Administrator posted links to official Gibson press releases on the subject:

 

. . Gibson Brands In Process of Refinancing of Company's Bonds

 

. . Gibson Brands Hires Benson Woo as Chief Financial Officer

 

 

.

 

All sounds good to me! Henry is an entrepreneur and knows what he is doing. All things mentioned sounds like he is on top of what he is doing...as his past history shows he always is! No reason to doubt anything in the press releases!

 

QM aka Jazzman Jeff

['Scales]

Could be streamlining of production facilities as well as ranges? if so, I'm confident they can find some savings and sell some assets and still produce a suitable range of great product.

 

PS: Just to note that that was a week ago - i.e. before much of the latest round of the conjecture articles, so maybe HJ will have more to announce soon.

[BluesKing777]

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There's a Lounge post linking a Music Radar article: Gibson [Henry] responds to bankruptcy reports, claiming new strategy “will lead to the best financial results the company has seen in its history.

 

Then a forum Administrator posted links to official Gibson press releases on the subject:

 

. . Gibson Brands In Process of Refinancing of Company's Bonds

 

. . Gibson Brands Hires Benson Woo as Chief Financial Officer

 

 

.

 

 

 

Talks like a.....politician!

 

Perhaps that could be his next job?

 

I suppose we just need to wait to hear the truth. It comes out sooner or later.

 

 

BluesKing777.

[QuestionMark]

Why do you doubt it is the truth? It’s his company and his customers and his investors and creditors. The media that wrote the negative article was only hearsay stuff and speculation. Henry’s words have a lot more believability and credibility than heresay and speculation by a non-insider.

 

 

 

QM ak Jazzman Jeff

[Murph]

Why do you doubt it is the truth? It’s his company and his customers and his investors and creditors. The media that wrote the negative article was only hearsay stuff and speculation. Henry’s words have a lot more believability and credibility than heresay and speculation by a non-insider.

 

He could buy Trump Tower and there will STILL be people in here saying he's broke.

[Murph]

It's weird.....

[Murph]

Go Henry!

 

 

[rct]

Why do you doubt it is the truth? It’s his company and his customers and his investors and creditors. The media that wrote the negative article was only hearsay stuff and speculation. Henry’s words have a lot more believability and credibility than heresay and speculation by a non-insider.

 

"New York, August 17, 2017 --

 

Moody's Investors Service downgraded Gibson Brands, Inc.'s ("Gibson") Corporate Family Rating to Caa3 from Caa2, its Probability of Default Rating to Caa3-PD from Caa2-PD, and senior secured notes to Ca from Caa3. The rating action is due to Moody's concern with Gibson's weak operating performance, liquidity pressure from approaching maturities, and the view that the company's capital structure is unsustainable. The rating outlook is negative.

 

"We feel that Gibson's capital structure is unsustainable due to the uncertainty over its ability to refinance debt that comes due in July 2018 and August 2018 given its very high leverage and weak operating performance," said Kevin Cassidy, Senior Credit Officer at Moody's Investors Service. Debt/EBITDA is approaching 10 times. "Despite our expectation of debt reduction over the next year with the expected proceeds from asset sales, we think debt/EBITDA will remain high at around 8 times," noted Cassidy.

 

Moody's expects Gibson to significantly decrease its cost structure over the remainder of the year. This should eventually lead to sustained margin improvement, although there is uncertainty about the timing of when the benefits are realized. "We expect EBITDA to remain essentially flat this year as we think margin enhancements will not be enough to offset revenue declines," said Cassidy. Moody's expects a significant decrease in revenue this year as the company reduces the number of SKUs in the Audio business and deals with the lingering effects of supply shortage issues that began in the first quarter of the fiscal year ended March 2018, new government regulations for certain wood products, and long-term secular pressure on guitar volumes in the Musical Instrument business.

 

Moody's downgraded the following ratings of Gibson Brands, Inc.:

 

Corporate Family Rating to Caa3 from Caa2;

 

Probability of Default Rating to Caa3-PD from Caa2-PD;

 

$375 million senior secured notes due 2018, to Ca (LGD 4) from Caa3 (LGD 4)

 

Outlook is Negative"

 

Did your banking committee consider Moody's "hearsay"? Do you know what debt/EBITDA is?

 

rct

[BluesKing777]

He could buy Trump Tower and there will STILL be people in here saying he's broke.

 

 

 

I don't think he will be buying anything, Murph.

 

This is a fire sale - I have worked through 4 and there are only 2 'originals' of thousands of people left! :

 

 

CEO Henry Juszkiewicz detailed the plans further, stating, “We have been monetizing assets like stock holdings, real property and business segments that could not achieve the level of success we expected.

 

“By monetizing these assets, we can reduce debt and generate funds to contribute to business segments that are thriving. It is important to our business to get back to the financial success we had to achieve the best financial terms in the refinancing of our company.”

 

 

BluesKing777.

[QuestionMark]

Moody’s is reliable...but, it quite clear in their statement that it’s downgrading of its rating has some positives in it and that it is not a doomsday narrative or a bankruptcy certainty by any means, as your prior comments lead one to believe. Moody’s is just calling the short term outlook as it sees it, that is not a death or BK knell as your prior argument said. Plus, still is no indication of bond holders organizing to force Gibson into BK or leave Gibson no other option but to do so.

 

And, your statements about my supposed bank committee are ridiculous. I am retired and only speaking from my experience of attending and participating in many bank criticized asset committees over the years. But, since you mentioned it, it is my sincere thought that if a former committee I was on saw the Moody’s downgrade, it would only mean our bank committee would also downgrade its risk rating of the company, which basically means we’re accurately reflecting the risks of our institution to our investors and to the regulators. It would not signal the need to foreclose or force a BK or not continue to work with a company such as Gibson who has a well thought out plan to correct any risk rating downgrades, improve its financials, etc etc as Henry as mapped out in his press statements. It would monitor the plan’s implementation by Henry, set up and establish checkpoint covenants to ensure Henry’s plan is proceeding and on-track, and, as needed, take steps to help with it with expertise so Henry’s plan succeeds.

 

I think you made a better argument before you brought in the Moody’s rating. Moody’s is only doing their job with their rating. If you recall, Moody’s was often cited once the Great Recession hit in 2008/9 for giving way too positive ratings and not doing their job to actually properly rate. They are now a lot more prudent so their ratings are more accurate help investors and banks to better rate their investments and assist with their internal rating systems to assess risk. But, they are not the end all. Bank management committees look a lot deeper into situations, workout plans, etc.

 

Just my take.

 

QM aka Jazzman Jeff

['Scales]

So Jeff, it wouldn't then mean that a bank/bondholders would need a higher rate return from the company who's rating had been downgraded to mitigate the added risk, thus adding further cashflow issues for the 'downgradee'?

(I'm genuinely asking, as that's what I thought the implications would be - in this case making it tougher for Gibson Brands). Cheers.

[QuestionMark]

I think they would charge a higher rate on the bonds to compensate for the higher risk.

 

But, RCT was asking me about a bank creditor committee that I referenced in an earlier forum exchange with him.

 

And, in his earlier forum exchange he was stating that bond holders were organizing to force Gibson into BK, which seems unsubstantiated. They would just charge a higher rate. And, bank creditors would work with Gibson, too, and not force a BK. Nor, is there a need for Gibson to file BK. Especially, with Henry having a plan to improve the company as well as having a track record of working through hard times. RCT seemed confident the bond holders would force Gibson into BK and not renew bond maturities. My take was it was in the best interests of the bond holders and creditors to work with Henry rather than do otherwise. Especially with such a high revenue company as Gibson, a lot of assets, being a leader in its field, and Henry having a plan to improve its financials, and a long successful track record. Bond holders and banks are in the business of helping companies through their investment in them. Not, taking over their businesses and liquidating them. That’s a last resort. Bond holders and banks are bond holders and banks and are not in the guitar or consumer electronics business. Or, the liquidation business. Except, as a last resort, which it is nowhere near considering-what Henry’s statements in the press releases shows. Although, bondholders and bank creditors will need to validate those in detail.

 

QM aka Jazzman Jeff

['Scales]

cool. Thanks for that.

[rct]

I think they would charge a higher rate on the bonds to compensate for the higher risk.

 

But, RCT was asking me about a bank creditor committee that I referenced in an earlier forum exchange with him.

 

And, in his earlier forum exchange he was stating that bond holders were organizing to force Gibson into BK, which seems unsubstantiated. They would just charge a higher rate. And, bank creditors would work with Gibson, too, and not force a BK. Nor, is there a need for Gibson to file BK. Especially, with Henry having a plan to improve the company as well as having a track record of working through hard times. RCT seemed confident the bond holders would force Gibson into BK and not renew bond maturities. My take was it was in the best interests of the bond holders and creditors to work with Henry rather than do otherwise. Especially with such a high revenue company as Gibson, a lot of assets, being a leader in its field, and Henry having a plan to improve its financials, and a long successful track record. Bond holders and banks are in the business of helping companies through their investment in them. Not, taking over their businesses and liquidating them. That’s a last resort. Bond holders and banks are bond holders and banks and are not in the guitar or consumer electronics business. Or, the liquidation business. Except, as a last resort, which it is nowhere near considering-what Henry’s statements in the press releases shows. Although, bondholders and bank creditors will need to validate those in detail.

 

QM aka Jazzman Jeff

 

I said they are organizing in the hope of swapping debt for equity. That is usually done as a company approaches bankruptcy, organizing bondholders is not a small task and it needs great impetus to do it.

 

Everything you say now starts making sense. Once you get away from the cult of personality and talking business it all works.

 

I have owned, gigged, broke, fixed, sold, traded, and bought just as many Gibsons in my life as the most braggadocious of Gibson owners in here, just not acoustics. I've given Gibson a whole lot more money than lots of the loudest in here, just not acoustics. Nobody wants Gibson Fender and Martin to continue past my long association with all three more than me.

 

But when this CRAP about Henry this and Henry that, good and bad, is just stupid. I don't know the guy any more than I new Smith at Fender. I don't dislike Henry and I don't love him, this is business, it is separate and beyond his grand smooth talking and great hand shaking and investor bilking. It's a business, this is all business, anything I say is business and has nothing to do with hurting anyone's feelings about having a beer with Henry and what a swell guy he is.

 

I've had a couple beers with CFMIV and the paint crew at Fender Musical Instruments Company, and when both of those companies have to pay the piper I'll be saying the same ideas, it is business no matter how much I love them and their stuff.

 

rct