Moody’s downgrades Gibson, notes

Moody's Investors Service said it downgraded Gibson Brands, Inc.'s corporate family rating to Caa3 from Caa2, probability of default rating to Caa3-PD from Caa2-PD and senior secured notes to Ca from Caa3.

Moody’s said the action is due to its concern with Gibson's weak operating performance, liquidity pressure from approaching maturities, and the view that the company's capital structure is unsustainable.

The outlook is negative.

"We feel that Gibson's capital structure is unsustainable due to the uncertainty over its ability to refinance debt that comes due in July 2018 and August 2018 given its very high leverage and weak operating performance," Moody’s senior credit officer Kevin Cassidy said in a news release.

Debt/EBITDA is approaching 10 times.

"Despite our expectation of debt reduction over the next year with the expected proceeds from asset sales, we think debt/EBITDA will remain high at around 8 times," Cassidy added in the release.

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