According to Reuters’, Remington Outdoor Company Inc., one of the largest U.S. makers of firearms, has reached out to banks and credit investment funds in search of financing that will allow it to file for bankruptcy.
According to sources, Remington missed a debt payment on one of its coupons to a creditor this week. As a result, Remington has been working with investment bank Lazard Ltd (LAZ.N) on options to restructure its $950 million debt pile, according to a Reuters report last month.
Remington is seeking debtor-in-possession financing that will allow it to fund is operations once it files for bankruptcy, the sources said. The size of the financing and timing of Remington’s bankruptcy plans could not be learned.
Some potential financing sources, including credit funds and banks, have balked at coming to Remington’s aid because of the reputation risk associated with such a move, according to the sources.
Remington, which is controlled by buyout firm Cerberus Capital Management LP, was abandoned by some of Cerberus’ private equity fund investors after one of its Bushmaster rifles was used in the Sandy Hook elementary school shooting.
The sources asked not to be identified because the deliberations are confidential. Remington did not respond to several requests for comment. Cerberus declined to comment.
Credit rating agencies have warned that Remington’s capital structure is unsustainable given its weak operating performance and significant volatility in the demand for firearms and ammunition.
Remington’s sales have declined in part because of receding fears that guns will become more heavily regulated by the U.S. government, according to credit ratings agencies. President Donald Trump has said he will “never, ever infringe on the right of the people to keep and bear arms.”
The Madison, North Carolina-based gun manufacturer faces a maturity of an approximately $550 million term loan in 2019. Remington also has $250 million of bonds that come due in 2020 and are trading at a significant discount to their face value at around 16 cents on the dollar, according to Thomson Reuters data, indicating investor concerns about repayment.
The term loan maturing next year is also trading at a significant discount to full value, at around 50 cents on the dollar, the sources said.
Remington’s sales plunged 27 percent in the first nine months of 2017, resulting in a $28 million operating loss.
What do you think is the reason for Remington’s declining sales and investor fear? Was it product driven or a fear of new attacks on the Second Amendment? Share your views in the comment section.
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Very bad news when banks follow liberals. Need to know the banks that refused , so we can boycott them. Remington should get back to basics and stop new firearms that are causing recalls. 870 pump shotgun was classic.
I’d say sales have dropped because they’re pushing crap products and backing said crap with poor warranty and customer service. I was let down by them on three occasions with three different firearms in 2017. No more Remington for me. I do sincerely hope they turn this around and come back strong.
Rick Goodall says
They aren’t huge players in the defensive pistol game, and although Remington subsidiaries build AR’s, Remington hasn’t gotten in on the customization craze. For the past several decades Remington has ignored the fact that its base has shifted: it’s now about prepping, not hunting. It’s about being tactical, not traditional. When the Second Amendment was being attacked in the 1990’s Remington said nothing while a Brazilian firearms manufacturer called out those who wanted Americans to give up their guns. While Savage gave quality for value, CZ came out of nowhere, and Ruger cultivated the South, Remington sat on its laurels and raised prices while they continued to pay their heavily unionized workforce. True, in recent years Remington made some bold moves, some of which — like the R51 and ensuing debacle — turned out to be too bold. Only the Obama administration’s hostility toward firearms and gun-owners allowed Remington to stay afloat while profiting from the panic. Panic is gone. Remington will follow unless they get on board with what makes money. Hint: it’s not the most expensive long guns in the U.S., getting dusty hanging on walls in shops and stores as fewer and fewer people hunt. Remington needs to exit the North, and move to a right-to-work state. They’ve got factories in Alabama and Kentucky. Start there, and start innovating on the AR platform. Don’t just copy Mossberg on shotguns. Hint: we don’t need any more 1911’s. Probably too late, but since I am a Remington loyalist I certainly hope not. Start driving the industry instead of tamely letting the future happen to them.
Mark Morse says
Frickin poor performance period. Freedom Arms has completely screwed the firearms industry period.
Dale Plescia says
A great firearms company,shows you how stupid some investor firms are,firearms don’t shoot people,people shoot people,this is very sad,hope Remington pulls this off
russell austin says
Remington’s Quality has been slipping for years. Everyone I know who have bought Remington products for years , talks about it.
Not a damn thing wrong with my Remingtons!
Might be tempted to buy another one now!