After bankruptcy, Gibson plots return to basics, and possibly ukuleles

(Reuters) - As Gibson Brands Inc targets an exit from Chapter 11 bankruptcy later this year, the iconic guitar maker plans a return to traditional guitars after an ill-fated attempt at computerizing them and possibly a foray into ukuleles, CEO Henry Juszkiewicz told Reuters on Wednesday.

FILE PHOTO: The Gibson logo is seen on a guitar strap at a store in Singapore April 3, 2018. Picture taken April 3, 2018. REUTERS/Thomas White

Nashville-based Gibson, the maker of guitars played by the likes of B.B. King and Slash, filed for Chapter 11 bankruptcy protection in May with roughly $500 million in debt and a plan to reorganize its musical instrument business under the new ownership of its lenders.

In an interview with Reuters as Gibson was preparing to show new products at the National Association of Music Merchants trade show in Nashville, Juszkiewicz said he was examining ways Gibson could expand its appeal beyond its pricey guitar models, which include the Les Paul and SG, to entice younger players and female players.

Many of Gibson’s electric guitars sell for over $2,000.

Juszkiewicz is also considering capitalizing on an industry-wide boom in sales of ukuleles, the small-bodied Hawaiian instrument. While the company sells some so-called ukes under its lower-priced Epiphone brand, Gibson has not made one under its flagship brand since the 1930s, and Juszkiewicz said Gibson would “absolutely” consider a return to that business.

“One of the most valuable ukes you can buy today is a Gibson uke made in the ‘30s. We’ve been there,” he said. But Juszkiewicz declined to disclose specific plans, saying the effort remains “a work in progress.”

But with Gibson’s core guitars, Juszkiewicz said the company plans on “getting back to the basics.” That is a reversal from its 2015 decision to fit guitars with computerized tuning machines, a move that did not go over well with some guitar players.

Juszkiewicz is returning his focus to the core guitar business - which grew 10.5 percent to $122 million in the 12 months ended in January - after seeing most of his time consumed by the fallout from the unsuccessful acquisition of a Hong Kong-based consumer electronics arm of Philips in 2014.

As part of Gibson’s restructuring, Juszkiewicz, who along with partners acquired the then-ailing guitar company in the late 1980s, has a two-year consulting agreement with the company’s lenders and soon-to-be owners, which include KKR Credit Advisors.

He said he did not know whether KKR had plans to name a successor as Gibson’s chairman and CEO.

“I’m sure the gears are moving,” he said.

KKR did not immediately return a request for comment.

Reporting by Stephen Nellis in San Francisco and Tracy Rucinski in Chicago; Editing by Matthew Lewis