GUITAR WARS
Gibson CEO, bondholders said to be fighting for control of company,
NEW YORK— Gibson Brands Inc.’s chief executive officer Henry Juszkiewicz and his creditors both see value in the iconic guitar brand — but that might be the only thing they see eye-to-eye on.
A group of bondholders advised by PJT Partners Inc. is pushing for a restructuring that would hand them ownership of the guitar-maker and let them install new leadership, according to people with knowledge of the plans.
The holders don’t expect Gibson’s earnings will be strong enough to attract new money for a refinancing to head off a default looming later this year, and creditors are reluctant to invest more funds while Juszkiewicz is still in charge, the people said. They asked not to be identified because the plans remain private.
The bondholders, who claim to control more than two-thirds of Gibson’s outstanding notes that come due in August, would allow management to keep a small ownership stake, according to the people. Juszkiewicz, who has run Nashvillebased Gibson for more than 30 years, says he has no plans to give up majority control and brought back Benson Woo for a second tour of duty as his chief financial officer.
Some bondholders are “not looking to get paid back and get interest, but have other intentions that are not necessarily my intentions,” Juszkiewicz, 64, said in a Feb.15 interview with Bloomberg.
“They’re trying to do everything possible to put the company in a worse position, and get us in a situation where they’re exclusively talking to us. But factually, we’ve made our interest payments, fulfilled our obligations, and our intent is to pay back all bondholders.”
Gibson is under pressure after loading up on debt for an ill-fated expansion into consumer electronics. Credit analysts have raised doubts that the company can repay borrowings coming due as soon as July. Gibson is working on a refinancing with investment bank Jefferies Group LLC, Juszkiewicz has said.
The company hasn’t been interacting with the organized group of existing bondholders, according to the people with knowledge of the proceedings. Instead, it’s trying to raise new money to refinance the entire capital structure and take out all of the existing debt, eliminating the conflict, the people said.
In addition to PJT, the bondholder group is advised by Paul Weiss Rifkind Wharton & Garrison, the people said. Representatives for the advisers and for Jefferies didn’t comment.