Cerberus’ Remington gunmaker files for bankruptcy
Remington Outdoor, the 200-yearold maker of rifles, handguns and bullets controlled by Cerberus Capital Management, filed for bankruptcy, after the election of a “true friend” to the White House ironically wound up stifling sales. The chapter 11 filing in Delaware bankruptcy court Sunday comes with a revised plan to eliminate US$620 million in debt, pay most creditors in full, and hand over most of the company to a group of lenders. Remington, which makes weapons for military, law enforcement, and hunting customers, had already outlined a plan on Feb. 12 to file for bankruptcy and give control to lenders including Franklin Resources Inc. and JPMorgan Asset Management.
The filing came after a weekend of marches across the U.S. seeking tighter laws to fight gun violence. Remington said in court filings that its efforts to finance a turnaround were complicated by parties who were reluctant to lend to a gunmaker. After approaching 30 potential lenders, financial adviser Lazard Freres & Co. found “the vast majority ” indicated “they were reluctant.” Eight parties who entered into further discussions later declined, and one outside lender who had agreed to provide a $100 million bankruptcy loan changed its mind, according to the filing. Remington’s fortunes took a hit last year after the election of Donald Trump, a self-proclaimed “true friend” of the gun industry. Gun enthusiasts traditionally stock up on firearms at times when political winds suggest tighter gun control lies ahead. But Hillary Clinton’s defeat erased those fears, leaving retailers stuffed with unsold inventory.
Chief financial officer Stephen P. Jackson described the reason for the company’s demise as a “significant decline” in sales and revenues in the last year after it had increased production rates to meet demand in 2017 that never materialized.
The Madison, N.C.-based company has 2,700 employees at seven U.S. manufacturing plants, according to court filings. It plans to win bankruptcy court approval of the restructuring by May 3. Recent setbacks for Remington have included an aborted public offering in 2011 and an investor revolt after one of its rifles was used in the Sandy Hook Elementary School mass shooting.