Gibson Guitar Brand Files Case Under Chapter 11 Of US Bankruptcy Code
May 1, 2018, 24 days ago
Gibson Brands Inc. ("Gibson" or "the Company"), today announced it will be re-focusing the Company on the manufacturing of world-class, musical instruments and professional audio products and the continued development of the Company's portfolio of iconic, globally-recognized brands including Gibson and Epiphone, by reorganizing around its core businesses. The Company has reached a "Restructuring Support Agreement" with holders of more than 69.0% in principal amount of its 8.875% Senior Secured Notes due 2018, and its principal shareholders, that clears the pathway for the continued financing and operations of the musical instruments business as well as a change of control in favor of those noteholders.
To implement the agreement, the Company and its U.S. subsidiaries today filed pre-negotiated reorganization cases under Chapter 11 of the U.S. Bankruptcy Code. The filings will allow the Company's Musical Instruments and Professional Audio businesses to continue to design, build, sell, and manufacture legendary Gibson and Epiphone guitars, as well as KRK and Cerwin Vega studio monitors and loud speakers, without interruption. The Restructuring Support Agreement provides funding for the musical instrument and professional audio businesses, supports the Company's key vendors, shippers and suppliers, and provides for the restructuring of the Company's balance sheet. Gibson will emerge from Chapter 11 with working capital financing, materially less debt, and a leaner and stronger musical instruments-focused platform that will allow the Company and all of its employees, vendors, customers and other critical stakeholders to succeed. Henry Juszkiewicz, Chairman and Chief Executive Officer of Gibson Brands, and David Berryman, Gibson's President, will each continue with the Company upon emergence from Chapter 11 to facilitate a smooth transition during this change of control transaction and to support the Company in realizing future value from its core business.
The Company's Gibson Innovations business, which is largely outside of the U.S. and independent of the Musical Instruments business, will be wound down. The wind-down of the Company's GI Business is not expected to impact the Company's reorganization around its core Musical Instruments/Pro Audio business.
"Over the past 12 months, we have made substantial strides through an operational restructuring," said Mr. Juszkiewicz. "We have sold non-core brands, increased earnings, and reduced working capital demands. The decision to re-focus on our core business, Musical Instruments, combined with the significant support from our noteholders, we believe will assure the company's long-term stability and financial health.
"Importantly, this process will be virtually invisible to customers, all of whom can continue to rely on Gibson to provide unparalleled products and customer service."
In conjunction with the restructuring, the Company received commitments for $135 million of debtor-in-possession financing from its existing noteholders. This financing, combined with cash generated from its operations, will provide the Company with the liquidity necessary to maintain its operations in the ordinary course during its reorganization proceedings.
The Company filed a series of motions that, pending Court approval, will allow the Company to operate its business throughout the process in the ordinary course, and to provide support to critical business-partners including vendors, shippers, and suppliers. The first day motions will allow the Company to continue to buy goods, manufacture and distribute its products to its customer base and continue to honor its warranty policies in the ordinary course.
"We are grateful for the continued support from our employees, customers, dealers, partners and suppliers as we move through the restructuring process," said Mr. Juszkiewicz. "The Gibson name is synonymous with quality and today's actions will allow future generations to experience the unrivaled sound, design and craftsmanship that our employees put into each Gibson product."
Additional information is available by calling Gibson's Restructuring Hotline, toll-free in the U.S. at 1-844-240-1258. For calls originating outside the U.S., please dial 1-929-477-8085, Email inquiries can be sent to firstname.lastname@example.org. Court filings and other documents related to the court proceedings are available on a separate website administered by Gibson's claims agent, Prime Clerk, at https://cases.primeclerk.com/gibson.
Alvarez and Marsal is serving as Gibson's Chief Restructuring Officer; Jefferies LLC is its financial advisor and Goodwin is providing legal counsel.
Paul, Weiss, Rifkind, Wharton & Garrison LLP is providing legal counsel, and PJT Partners is the financial advisor, to the ad hoc group of unaffiliated noteholders that is supporting the Company's restructuring.
Cautionary Statement Regarding Forward-Looking Statements:
This press release contains forward-looking statements within the meaning of the U.S. securities laws. Forward-looking statements may include, but are not limited to, statements relating to our outlook and future financial performance, including the illustrative Adjusted EBITDA range described above. In some cases, you can identify forward-looking statements by terminology such as "believes," "anticipates," "plans," "expects," "intends," "estimates," "projects," "should," "will," "may," "would," "contemplates," "aims," "pro forma" and "might," the negative of such terms or other comparable terminology. Forward-looking statements reflect our current views about future events, are based on estimates and assumptions and are subject to known and unknown risks, uncertainties and contingencies. Many important factors could cause actual results or achievements to differ materially from any future results or achievements expressed in or implied by our forward-looking statements, including the factors listed below. Many of the factors that will determine future events or achievements are beyond our ability to control or predict. The Company's actual results could differ materially from those stated or implied in forward-looking statements due to a number of factors, including but not limited to, risks detailed in the Company's posting, dated April 4. 2018, to its intralinks website that may be accessed by certain persons in accordance with the indenture governing the Company's outstanding debt securities. The forward-looking statements included herein reflect our views and assumptions only as of the date of this press release. You should not place undue reliance on forward-looking statements. We assume no responsibility to update any forward-looking statements and we do not currently intend to provide additional guidance in the future.