Gibson Brands still aims to refinance bonds; KKR deal falls through

By Susanna Moon

Chicago, April 5 – Gibson Brands, Inc. said it is talking with other potential investors about refinancing its bonds after failing to reach an agreement during last month’s negotiations.

The previous negotiations from March 15 to March 28 were between Henry Juszkiewicz and David Berryman as shareholders and KKR Credit Advisors (US) LLC about a potential debt-to-equity transaction.

Had the refinancing been successful, it would have involved a change of control that would have resulted in the company being substantially deleveraged through a debt-to-equity conversion in which shareholders would receive some cash and/or warrants, according to a company release on Thursday.

Juszkiewicz is Gibson’s chairman and chief executive officer.

When the negotiations ended on March 28, the “shareholders and KKR were significantly divergent in their views regarding the appropriate consideration for the various parties involved,” the release noted.

During the negotiations, the shareholders showed an illustrative implied future equity value for the company’s musical instruments and pro audio businesses based on an adjusted EBITDA range of $60 million to $65 million and an assumed EBITDA multiple of 10.7x, the company said.

The company said on Feb. 15 that it was refinancing its bonds and that it was in the process of arranging a new credit facility to replace the bonds.

The company noted that it had been working with Jefferies in a process to manage the refinancing process.

Based in Nashville, Gibson Brands is a musical instruments and consumer and professional audio company.

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