Gibson Guided Out of Bankruptcy by Former Rocker Turned Businessman
Iconic guitar manufacturer Gibson Brands Inc. have been lead out of bankruptcy by Nat Zilkha, a former rocker who has worked at global investment firm KKR & Co. for the last decade.
Before entering the financial world, Zilkha was the lead guitarist and dobro player for Red Rooster, a New York-based alt-country band that formed in 1998 and released three albums. On Tuesday (Oct. 2), Gibson, with Zilkha's help, won a judge’s approval to "exit court oversight under the ownership of KKR and other lenders," reported Bloomberg.
The financial media company reported that various lenders have fought for months to control the 124-year-old music company. Zilkha, who works as KKR's head of alternative credit, hopes the restructured Gibson company will debut in early November. Under the current plan, he will be one of the company's board members.
“I feel like I have a personal relationship with the product,” Zilkha, told Bloomberg. "This is a great American brand that sort of lost its way. It’s almost like a responsibility to try to bring it back to what its supposed to be.”
Gibson, historically one of two giants in the guitar industry (the other being Fender), went bankrupt in May. Many have blamed longtime Chief Executive Officer Henry Juszkiewicz for the company's financial decline. Four years ago, Juszkiewicz attempted to rebrand Gibson as a widespread music lifestyle company and spent $135 million for an audio-based consumer electronics unit of Koninklijke Philips NV.
As a condition of investing new funds in Gibson, KKR originally wanted to remove Juszkiewicz. In reaction, Gibson tried to "either sell itself or recapitalize, but that effort failed and Gibson instead cut a deal with the lenders," reported Bloomberg.
The terms of the new deal call for Juszkiewicz and co-owner Dave Berryman to have their equity stakes canceled, and both will have to sign a consulting agreement that will prevent them from badmouthing Gibson for three years.
This will allow Gibson to exit bankruptcy and take on a new board of directors, the majority of whom will be guitarists. The aim is to restore consumer confidence in the company by refocusing on the instrument that made the brand famous around the world. Over the decades, countless legends, including Led Zeppelin, AC/DC. KISS, Judas Priest, Metallica, Guns N' Roses and others have considered Gibson guitars their go-to instruments.
The new Gibson will consist of around 800 employees under a yet-to-be-named CEO. By drawing the focus back to the almighty axe, Zilkha hopes that KKR will be able to secure customer support for the company, which has helped guide the development of the electric guitar.
“For us, establishing the credibility that we intend to deliver is important,” Zilkha said. “We are musicians. We care deeply about the brand and we are going to protect it.”
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