The problems continue at Gibson Guitars, as Standard & Poor’s downgraded the company and news emerges that Gibson is laying off workers at its custom shop.
“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,” Standard & Poor’s said in a note to clients. “We are lowering our corporate credit rating to ‘CCC-’ from ‘CCC’.”
The negative outlook reflects what S&P Global called the “increased likelihood” that a default or restructuring event could occur within the next six months, the rating agency also said.
Also, a Nashville newspaper reported that Gibson has laid off about 15 employees from its Custom Shop, a part of the company dedicated to making scrupulously correct recreations of vintage electric guitars and special one-off orders.
The Nashville Post quoted Gibson Chief Executive Henry Juszkiewicz as saying that the staff cuts are “part of broad initiative throughout the company to prepare for our refinancing.”
The company’s total debt outstanding as of Dec. 31, 2017 was $519 million, S&P Global said.
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Gibson was founded in 1894 and makes electric and acoustic guitars, and consumer and professional audio. Juszkiewicz acquired Gibson in 1986 with fellow investors. The company has a portfolio of over 100 brand names.