Laying down arms
Remington in debt-for-equity swap
Remington Outdoor announced plans to file for bankruptcy on Monday, succumbing to a “Trump slump” that whacked sales by 30 percent in its most recent quarter
The 202-year-old Madison, NC, gun maker, saddled with an enormous amount of debt, said a debt-for-equity swap would lop off $700 million of its $950 million debtload.
The restructuring will also provide $145 million in new capital.
The prepackaged plan would also transfer 82.5 percent of the company’s equity to term loan lenders and the remaining 17.5 percent to third lien noteholders, the company said.
“Difficult industry conditions make today’s agreement prudent,” Executive Chairman Jim Geisler said.
Private equity giant Cerberus Capital Management acquired Remington in April 2007 for $370 million.
Its ownership of the gun manufacturer — the world’s third-largest, behind industry leader Sturm, Ruger & Co. and American Outdoor Brands — included a planned IPO that was scuttled in 2011 because of a CEO vacancy.
The Sandy Hook school shooting, which killed 20 Connecticut children in 2012, prompted a backlash after the weapon used in the massacre was identified as a Remington Bushmaster AR15-style rifle.
Cerberus quickly tried to divest itself of the company but found no takers.
The PE firm eventually allowed disaffected investors to sell back their stakes.
Remington’s latest woes began with the election of President Trump.
No longer fearful of tighter federal gun laws, enthusiasts slowed their gun purchases.
Firearm background checks, an indicator for gun sales, fell 8.4 percent last year.
Trump’s victory also left the industry with excess inventory, which sent investors to the sidelines.
American Outdoor Brands shares are down 63.9 percent since the election; Sturm Ruger is down 28.5 percent.
Cerberus declined to comment on its portfolio company’s bankruptcy.