USA TODAY International Edition
Gunmaker Remington files for bankruptcy
Debt, declining sales seal iconic firm’s fate
Remington, one of the nation’s oldest gun manufacturers, filed for bankruptcy court protection late Sunday amid heavy debts, falling sales and the potential for adverse court rulings stemming from the 2012 Sandy Hook school massacre.
Remington Outdoor and its subsidiaries submitted a Chapter 11 petition to the federal bankruptcy court in Delaware, outlining a restructuring plan that would maintain the company’s operations, continue pay and benefits for employees and turn the operating control of the company to creditors.
The agreement would end the controlling financial interest of Cerberus Capital Management, the private equity company that acquired what was then Remington Arms, for $118 million in 2007. Cerberus unsuccessfully tried to sell the company before the bankruptcy protection decision.
Madison, N.C.-based Remington, a maker of shotguns, rifles and handguns since 1816, listed liabilities between $100 million and $500 million, with an identical estimate of assets. Billed as “America’s Oldest Gunmaker,” the company’s brands include Remington, Bushmaster Firearms and DPMS/Panther Arms.
Remington announced the preagreed bankruptcy plan Feb. 12. But the filing was delayed after the Feb. 14 mass shooting that killed 17 people at Marjory Stoneman Douglas High School in Parkland, Fla.
The deal said Remington would be able to write off $700 million of $950 million in estimated debt. The agreement also would provide $145 million of new capital for its operating subsidiaries and provide $100 million in creditor-funded money as a debtor-in-possession term loan, the company said.
Stephen Jackson, Remington’s chief financial officer, said in a bankruptcy declaration that the company and its subsidiaries have held leading U.S. market positions in a variety of firearms and ammunition categories since 2008 — including sales to military and law enforcement agencies.
However, along with the company’s debts, he cited a series of financial setbacks over roughly the last year.
Remington increased production rates during 2016, based on expected consumer demand in 2017, but that demand “ultimately did not materialize,” Jackson stated.
At the same time, the markets faced competitive pricing pressure along with “accelerating reduction in demand,” he said.
Remington borrowed to ramp up production to meet sales that fell below expectations. And the company faced market pressure from competitors that engaged in “unusually heavy discounting and promotions,” Jackson said.
Some gun dealers said they were unsurprised by the bankruptcy filing. They said the company focused on big-box stores, then those retailers started pulling out of the market.
“Remington bet on the wrong horse,” said Justin Anderson, marketing director for Hyatt Guns in Charlotte. “They turned their backs on shops like ours.”