The EDM revolution has not been kind to one of America’s oldest guitar manufacturers. Standard and Poor recently downgraded the 116-year-old company’s credit rating to CCC-minus, from the already very low rating of CCC, indicating that a default is imminent.
Gibson Guitars has $145 million in outstanding bank loans that will come due on July 23 and another $377 million of outstanding secured notes maturing on Aug. 1.
“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 analyst Francis Cusimano Jr.
The famed guitar company, which sells the beloved Les Paul style guitar, must now find new investors to keep the company afloat, a challenge considering its low bond ratings. If it can’t resolve the crisis, Gibson will likely have to file for Chapter 11 bankruptcy protection this summer.
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