Creditors, lenders want renewed effort to sell company at ‘much higher’ price than now targeted
authors Geert De Lombaerde
Several players in Gibson Brands’ Chapter 11 restructuring process have raised vociferous objections to the company’s plan to sell to a group of bondholders led by a unit of private equity KKR.
In Delaware bankruptcy court filings filed during the past week, both the official committee of unsecured creditors and a division of fellow PE titan Blackstone Group have called the planned sale flawed and called for Nashville-based Gibson to properly market its assets to potential buyers. The creditors committee has called the proposed sale plan “patently unconfirmable” and says it has “fatal deficiencies” because it “impermissibly favors insiders, equity holders, and the [KKR-led group].”
Blackstone unit GSO Capital Partners — which in early 2017 loaned Gibson $130 million — says Gibson’s sale efforts earlier this year were “designed to manufacture evidence of market indifference and ultimately hand the Debtors’ business to the KKR Group.” They also point to Gibson officials’ discussion of “multiple other potential offers” in board presentations before they filed for protection from their creditors on May 1. GSO has asked for copies of those offers without success so far.
“GSO supports a sale process here because, unlike in many Chapter 11 cases, there is actual evidence of interest from credible third-party bidders who may be willing to purchase the company at a much higher valuation than the one current posited,” GSO said in one of its filings.
Both objectors want the bankruptcy court to postpone a hearing on Gibson’s plan or to at least force the company to scour the market for possible buyers — with GSO committing to providing bridge financing while that happens. The two groups also want Gibson to provide more details about its financials and efforts to sell itself to creditors ahead of any sale vote.
For their part, Gibson executives on Tuesday said that, starting early this year and ending on May 1, they contacted 58 parties to talk about a sale, recapitalization or another type of transaction. While 27 entities signed non-disclosure agreements to take a closer look at either Gibson’s instruments or consumer electronics divisions, no deal materialized.
Early this month, Gibson said it had lost nearly $10 million in May, which included about $8 million in costs related to its Chapter 11 filing.
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