More Trouble for Gibson...

Wednesday, March 31, 2010| by Will Chen

The troubles continue to mount for Gibson guitars.  In December of last year, I posted an entry summing up all the troubles plaguing Gibson in 2009. A recent article in the Financial Times is now detailing Gibson's trouble with their lenders. Per the article, Gibson has yet to deliver their audited 2008 financial reporting.  Additionally, the company is also late to provide their 2009 reporting. Gibson is said to be blaming the late 2009 reporting on management turnover, the company cycled through three different CFO's in 2009. So why is their late reporting of concern?  According to the article, Gibson may be in violation of their loan covenant which could result in them being in default of the loan. If the debt is called, bankruptcy may ensue. At the very minimum, Gibson will have to find ways to reorganize their debt. Though considering the Moody's downgrade of Gibson last year, one wonders if the company is already living on borrowed time. read the full Financial Times article here.

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