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Thread: AMERICAN CAPITAL PROVIDES UP TO $52.5 MILLION TO G

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    Gibson, did this loan or buyout restart the business

    AMERICAN CAPITAL PROVIDES UP TO $52.5 MILLION TO GIBSON GUITAR

    Bethesda, MD - September 8, 2005 - American Capital Strategies Ltd. (Nasdaq:ACAS) announced today it has provided financing facilities of up to $52.5 million to Gibson Guitar Corp., a well-known designer, manufacturer, marketer and distributor of electric and acoustic guitars, bass guitars, banjos and mandolins, pianos, drums, keyboards, electronically synthesized instruments and a variety of instrument-related products and accessories, including amplifiers, speakers, string picks and straps. American Capital's financing facilities take the form of second lien notes and a second lien committed acquisition line. Bank of America is providing a revolving credit facility and investing in senior term debt. Gibson's current owners are maintaining their 100% equity ownership.

    "We are delighted to support the development of a music industry icon," said American Capital Chief Operating Officer Ira Wagner. "Our ability to directly invest capital in middle market companies is critical to their success. At Gibson, we are backing an excellent management team with substantial company ownership that has produced an enviable track record of growth and strong cash flows."

    American Capital has invested over $2.8 billion in the last twelve months, over $1.9 billion year to date and $636 million quarter to date. For more information about American Capital's portfolio, go to http://www.americancapital.com/our_p...portfolio.cfm.

    "Gibson sells some of the most recognized brand names in the musical instruments industry," said American Capital Managing Director Jeff MacDowell."Both Henry Juszkiewicz, Chairman and CEO, and David Berryman, President, are highly motivated individuals, dedicated to maintaining the Company's leading position and taking it to another level by capitalizing on growth opportunities at home and abroad."

    "Worldwide demand for Gibson products is extremely high. This financing will give Gibson flexibility as it continues to grow both organically and through acquisitions," said American Capital Vice President John Drennan.

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    Simple. Gibson buys the Cafe, shuts down negative posts, recapptures its investment in a few months. Scott retires to someplace flat.

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    According to the press realease, this is basically a second mortgage, used to come up with cash (or a line of credit) for whatever the company wants to use it for. Revivifying Lloyd Loar's body, for example.
    Forget with the cowbell, already...

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    Just wait; there will be a Gibson Showcase outlet in each major city all across the country. #They have to have places to sell their product, and now that they have done away with their dealer network, this is the only answer.

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    Rroyd, that's my bet - hope you're right. Nashville's a long way from Abilene.

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    It may have to do with their other lines also. The Toys 'R Us flyer has a "Maestro by Gibson" flying V electric guitar for $119. Oddly enough, it takes a lot of money to build cheap instruments.
    "First you master your instrument, then you master the music, then you forget about all that ... and just play"
    Charlie "Bird" Parker

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    Isn't it pretty common for companies to maintain lines of credit like this. I suspect that this is a press release from the company making the money available, just to get its name in print so it will be remembered. It may just mean that Gibson is healthy but getting ready to make some acquisitions. Maybe they are planning to buy Gilchrist and Apitius and force them to build mandolins in America! Would $52 million be enough to buy them?

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    Shane, face it, everything's a long way from Abilene.

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    Rroyd is probably very close with his assessment.

    I was in the Gibson Showcase at the shopping mall last weekend, and there's an amazingly large selection of mandolins and Dobros hanging from the walls. A network of Gibson Showcase stores would ease the pressure on the sales department to open up new distributorships (compensating for the ones lost), or perhaps result in eliminating most of the field salesforce altogether. A sad, but possible scenario.

    Steve D.

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    Quote Originally Posted by (Jim Hilburn @ Oct. 29 2005, 19:17)
    Shane, face it, everything's a long way from Abilene.
    Yeah, I know. But....no crowds!

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    Registered User jim_n_virginia's Avatar
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    Maybe Gibson is going to buy out the top 10 builders (5 mill each) like Flatiron and then you will only be able to get a "fill in the blank" from the Custom Shop.

    I think if they buy out

    1. Monteleone
    2. Collins
    3. Gilchrist
    4. Dudenbostel
    5. Brentrup
    6. Michael Kelly
    7. Eastman
    8. Morgan Monroe
    9. Kentucky
    10. Saga

    Gibson wil OWN the mandolin market!!!!

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    Shane, even I'm a long way from there and I can leave after noon and make it in time for a 72 ounce steak for dinner.
    Ron Lane
    2002 Gibson F-9
    Martin DC-18GTE

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    Quote Originally Posted by (BlueMountain @ Oct. 29 2005, 19:05)
    Isn't it pretty common for companies to maintain lines of credit like this. I suspect that this is a press release from the company making the money available, just to get its name in print so it will be remembered. It may just mean that Gibson is healthy but getting ready to make some acquisitions. Maybe they are planning to buy Gilchrist and Apitius and force them to build mandolins in America! Would $52 million be enough to buy them?
    Maybe they'll buy Gianna Violins out. That would be wonderful! I'm ready!

    On the other hand, I was quite impressed with their OAI lineup. The mandolins seemed so much better than a few years ago. Maybe more than a few, time flies. And the support of the acoustic end of things as far as people and display seemed so much better than at NAMM displays.

    Big Joe seems quite reasonably proud of what they're doing.
    Stephen Perry
    www.giannaviolins.com - Primarily violin family
    mandovoodoo.com - Acoustic blueprinting
    South Side Chicagoland

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    arbarnhart could be on to something.....setting up for production of cheap overseas
    manufacturing & then distribution, would be going for a different slice of the pie

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    Registered User John Flynn's Avatar
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    Many of these posts seem to be assuming that the main use of the line of credit will be for OAI. My guess the main use of the financing would be for the Gibson's big lines, like eletric guitars. I think OAI will stay around, but it is definitely building down to be something smaller and more esoteric than it has been.

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    If you look up America Capital this is not the only investment that have made to a company. Suppling millions to support mergers, buyouts, Kayak companies, Bushnell etc..

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    Quote Originally Posted by (BlueMountain @ Oct. 29 2005, 16:05)
    Maybe they are planning to buy Gilchrist and Apitius and force them to build mandolins in America! Would $52 million be enough to buy them?
    I had a chance to play a Gilchrist and liked it very much, but I wouldn't pay $52 millions for one.

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    aka "Hydrilla" Darren Kern's Avatar
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    Yeah, OAI could start putting a store at all the Mills malls, like Bass Pro Shops did!
    My original IV mandolin kit blog- http://makingamandolin.blogspot.com/

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