Cerberus hands gun maker to Wall Street creditors at tense moment
STEPHEN A. Feinberg spent the past decade building America’s leading firearms empire. Now, as the nation convulses after its latest massacre, he’s plunging into what might just be one of the most politically fraught corporate bankruptcies in recent memory.
Amid rage over the Feb 14 Florida school shooting, Feinberg’s Remington Outdoor Co. is trying to pull off a swift trip through the court.
The process will hand ownership of the guns-and-ammunition conglomerate from Feinberg’s private investment firm, Cerberus Capital Management, to such well-known names as Franklin Resources Inc. and JP-Morgan Asset Management and their broad customer bases.
The soon-to-be owners, who still must line up fresh financing, won’t operate the company for long, according to people with knowledge of the matter. They’ll seek to sell it in whole or part soon after the reorganised firm emerges from bankruptcy court, the people said.
The deal is coming together even as investors’ distaste for the gun trade is growing, said Kevin Cassidy, an analyst at Moody’s Investors Service.
“It absolutely hurts them, being in this kind of industry,” said Cassidy, who covers Remington. “Just like some funds no matter what won’t invest in tobacco, there are investors now that feel the same about gun companies.”
Cerberus will leave behind a cadre of advisers at Remington through June 30; The situation is touchy enough that in restructuring documents their names have been blacked out.
Liz Micci, an outside spokeswoman for Cerberus, declined to comment for this story.
It’s a remarkable turn of events for Feinberg, a gun enthusiast whose firm owns a major defense contractor and briefly sought a national- security role in the Trump administration. His move into the consumer firearms trade made him among the biggest seller of guns in a nation awash in them.
But after the 2012 Sandy Hook school massacre in Connecticut, his investment became a burden he has struggled to shed, finally resorting to unusual steps to buy out big investors.
The company and indeed the entire industry thrived with President Barack Obama in the White House as firearms enthusiasts foresaw crackdowns. It was poised to continue its lucrative run under a Hillary Clinton administration. Instead, Donald Trump, a selfproclaimed “true friend” of guns, won the election last year and the urgency to purchase faded. Sales fell, and retailers found themselves holding unsold inventory.
Remington is America’s oldest gunmaker, with a history that dates to 1816, when Eliphalet Remington II made a flintlock. It was later owned by DuPont, which sold it to the New York investment firm Clayton, Dubilier and Rice in 1993.
In 2007, Cerberus paid US$ 118 million for Remington, agreeing to take on US$ 252 million in debt for the Madison, North Carolina, company. It rolled Remington into the Freedom Group, which included 13 industry giants, such as Bushmaster Firearms, Tapco, and Dakota Arms.
Today, the company employs 3,500 people and is among the largest American manufacturers of ammunition and firearms.