One of the most iconic guitar brands in history is facing potential bankruptcy

Gibson faces $145m in unpaid bank loans and a shrinking market for electric guitars -- and they're not the only rock icons in trouble...

February 20, 2018

According to a report by the Nashville Post, Gibson — maker of legendary guitars like the Les Paul and the Flying V — is in serious financial straits.

In the 116-year-old company’s heyday, rock gods like Jimmy Page, Slash, and Eric Clapton shredded on their products, and inspired entire generations to pick up the 6-string.

Now, Gibson faces $145m in unpaid bank loans and a shrinking market for electric guitars.

When tech isn’t the solution

Founded in 1902 in Kalamazoo, Michigan, Gibson’s financial troubles began relatively recently, and can largely be attributed to technology.

In the last decade, the industry has seen electric guitar sales slip from 1.5m to 1m units per year — and in an attempt to revamp interest, Gibson’s CEO, Henry Juszkiewicz, made a series of bad investments in electronics, including a wildly unsuccessful, multi-million dollar push for “self-tuning” guitars.

About a year ago, a subsidiary of Blackstone kept the company afloat with a $130 million loan — but now, investors are getting testy.

It’s not just a Gibson problem; it’s a guitar problem

Another major guitar brand, Fender, is $100m debt and has watched their revenue fall by 19% since 2012. The world’s largest guitar retailer, Guitar Center, is $1.6B in debt and faces an uncertain future.

At Gibson, Juszkiewicz has 3 options in front of him: he can refinance the company’s debt at an unfavorable rate, pay it off with his own equity, or declare bankruptcy.

Unfortunately, the last of these seems most likely.

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