June 18, 2018

Debt-laden gunmaker Remington slated to file pre-pack bankruptcy in Delaware

15 February 2018, 07:51 | Winston Chapman

Debt-laden gunmaker Remington slated to file pre-pack bankruptcy in Delaware

A convention attendee looks at a Remington bolt action rifle at the 2015 NRA Annual Convention in Nashville Tennessee

Fortune reports the bankruptcy results from two things: A reduced demand for new firearms and the hard climate created by the fact that the Sandy Hook Elementary attacker used a Remington Bushmaster rifle to carry out his criminal attack. The company produces the Bushmaster rifle used in that shooting.

Remington is planning to file for bankruptcy in DE seeking to write off debt of more than $700 million.

Under the restructuring, holders of Remington Outdoor 's $550 million term loan will receive an 82.5 percent equity stake in Remington while third-lien noteholders get 17.5 percent of the company and four-year warrants for a 15 percent stake. Creditors will also provide a $100 million debtor-in-possession loan to finance operations throughout bankruptcy.

"Difficult industry conditions make today's agreement prudent", Remington Executive Chairman Jim Geisler said in the release.

Remington's sales took a hit after the 2016 presidential election, which analysts explain is a result of President Donald Trump's promises to be lax on gun laws.

But unlike other gun manufacturers Remington also has been shrouded by lawsuits following the school shooting tragedy in Newtown, Conn., in 2012. Remington says the restructuring plan will reduce its debt by $700 million.

Firearm background checks had risen steadily for at least a decade and spiked just before Trump's election, with many expecting a Hillary Clinton victory.

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Rumors of a potential bankruptcy filing have been swirling for several weeks. We have an outstanding collection of brands and products, the unqualified support of a vibrant community across the industry, and a deep and powerful culture.

"Importantly, the fundamentals of our core business remain strong", added Anthony Acitelli, Remington's CEO.

"We are very concerned that Remington will be unable to refinance debt that comes due in April 2019 given its weak operating performance and high financial leverage", said Kevin Cassidy, the senior credit officer at Moody's Investors Service.

Remington is owned by the private equity firm Cerberus Capital Management.

In conjunction with the announcement, Remington disclosed unaudited and preliminary 2017 data that showed the company as of December had net revenue of $603.4 million, down from $865.1 million the previous year. The deal also called for Cerberus to assume Remington debt totaling $252 million, up from $157 million seven years earlier.

A lawsuit filed by family members of the Newtown tragedy victims says Remington should not have sold such a risky weapon to the public. Trump, whose campaign was heavily supported by the National Rifle Association, has made it clear he wants no part of reining in firearms.

Barber also has been pushing to ban secrecy in civil-lawsuit settlements in federal court, saying that information on defective products should be made public, forcing companies to fix the defects or face economic consequences from consumers. But in 2012, Remington took a hit on the news that Adam Lanza used one of the company's Bushmaster XM15-E2S in the CT massacre in which he killed his mother and 26 children and educators at Sandy Hook Elementary School.

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