Famous guitar maker struggles with itself and its Philips-heritage
The world-famous, more than 100 years old American guitar maker Gibson only has five months to prevent bankruptcy. If this does not succeed, it will also mean the end for Philips Audio, the illustrious part of the Philips legacy that was acquired by Gibson in 2014.
The company owes $375 million in secured notes which are due to be paid later this year. $16.6 million has been recently repaid on those notes, which were issued in 2013. If the rest of the money cannot be repaid by July 23, another $145 million in bank loans will become due immediately.
In a statement, the Nashville-based company said it “fully expects the bonds to be refinanced in the ordinary course of business” and is “concluding a thorough strategic and budget planning process to identify those areas where it can maximize its investments, and pare back areas where investments have not been performing to expectation.” In order to free up money in the short term, shares, real estate and “business segments that could not reach our expected success levels” are currently being sold.
What that means for the legacy of Philips audio is not yet clear. Three months ago, Gibson announced that it was discontinuing the further development of the Cakewalk brand in order to fully focus on the Philips brand:
“Gibson Brands announced today that it is ceasing active development and production of Cakewalk branded products. The decision was made to better align with the company’s acquisition strategy that is heavily focused on growth in the global consumer electronics audio business under the Philips brand.”
At Strijp-S in Eindhoven, Gibson still has a customer service centre with several dozen employees. Philips Audio is known for inventions such as the cassette tape and the CD.
