Gibson Brands’ Henry Juszkiewicz Responds To Credit Downgrade

Gibson_Script_BLACK_hiresNashville-based Gibson Brands has had its credit downgraded by Moody’s, lowering the brand’s corporate family rating (CFR) to Caa1 from B3, due to poor sales of its 2015 guitar models, high leverage, risk associated with the consumer electronics business, and high turnover among senior financial management. The downgrade also reflects the risk that the company may not be able to meet near-term financial commitments, according to Moody’s.

“The downgrade reflects the weak performance and the resulting very high leverage and also the additional financial obligations Gibson incurred from its agreement with a consumer electronics supplier to settle overdue payables and the stress it puts on company’s liquidity profile,” said Kevin Cassidy, Senior Credit Officer at Moody’s Investors Service.

Henry Juszkiewicz, Chairman/CEO Gibson Brands, released the following statement:

The company has posted quarterly results for our quarter ending December 2015 that were materially better than they were for the prior year. While we experienced a soft reception to our 2015 products, we have since introduced our improved 2016 product line that is performing extremely well both in sales to retailers and sell through to consumers globally. We feel we are on an upward trend, poised for an excellent year and are confident of the future.

We also recently brought on board an outstanding new CFO after our former CFO left to start a new business. We feel the addition of a world-class CFO who has a global background with several major companies has significantly improved our capabilities in this area.

We tripled the size of our business one year ago and have been integrating a substantial new business. It is not unusual to have some speed bumps in the integration process of a major new global entity. We believe we are progressing well and are very excited about this coming year.

As part of our continued commitment to Nashville and American manufacturing, we continue to hire people and expand. We also hope to start manufacturing consumer audio products in our Nashville manufacturing campus within the year.

According to Moody’s, Gibson Brands needs to generate cash flow to address its $36 million financial obligations to a consumer electronics supplier by December 2016, as well as its subsequent $62 million obligation by December 2017. Over the longer term, an upgrade could be considered if Gibson improves and sustains its operating performance.

Gibson Brands Inc. designs, manufactures, markets, and globally distributes premium musical instruments, consumer and professional audio and video products, information products, and related accessories. The company’s product offerings are marketed under a portfolio of brands including Gibson, Philips, Epiphone, Kramer, Baldwin, Onkyo, KRK, and Stanton.

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Jessica Nicholson serves as the Managing Editor for MusicRow magazine. Her previous music journalism experience includes work with Country Weekly magazine and Contemporary Christian Music (CCM) magazine. She holds a BBA degree in Music Business and Marketing from Belmont University. She welcomes your feedback at [email protected]

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