Moody's affirms Gibson

Moody's Investors Service said it affirmed Gibson Guitar Corp.'s Caa1 corporate family rating, Caa2 probability-of-default rating and Caa1 (LGD3, 32% from 31%) credit facility following the recent issuance of its 2008 and 2009 audited financial statements.

The outlook remains developing.

"While Gibson has removed the uncertainty surrounding its ability to issue audited financial statements, there is now significant liquidity concerns as the recent credit facility amendment accelerated the maturity date to September 2011 and the company does not have the ability to repay the term loan absent a refinancing," Kevin Cassidy, a senior credit officer at Moody's, said in a statement.

Gibson's Caa1 corporate family rating reflects the revenue volatility exhibited during the recession, its small scale with revenue under $300 million and concern over Gibson's corporate governance culture, the agency said.

The company's modest credit metrics and significant customer concentration with Guitar Center also constrain the rating, the agency noted.

Gibson's leading market share in guitars, strong brand recognition, diversification within guitars and geographic diversification supports the rating as well as its cash generating ability also benefits the rating, the agency said.

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