About two years go, in the politically charged aftermath of the Sandy Hook slaughter, Cerberus Capital Group promised to sell The Freedom Group. Cerberus made the pledge to deep-six the non-synergistic agglomeration of firearms-related companies under pressure from the California State Teachers’ Retirement System (CalSTRS). The teachers were mortified – mortified I tell you! – by the fact that a portion of their gi-normous pension fund was vested with the money men who owned the company that manufactured the Bushmaster rifle the Newtown killer used to murder 26 people [above]. Unfortunately for the educators, no one wanted to buy The Freedom Group. As time went on . . .
The Freedom Group continued to shed value. They’d already run the Marlin brand into the ground. Suppressor manufacturer AAC was/is headed in the same direction. Remington settled with litigants injured by defective triggers (for an undisclosed number of millions), and then issued a massive recall to fix the problem. Their R51 handgun was a complete dog. And the post-Newtown gun-buying boom went bust.
Bottom line: Cerberus failed to live up to its promise to sell The Freedom Group, which continues to tank. Nor did it honor a subsequent pledge to re-jigger things so that the PC-minded CalSTRS could shed ownership of The Freedom Group without bailing from the Cerberus mothership.
Fortune brings up to speed with the CalSTRS kerfuffle:
So while Cerberus continues to be open to an exit — either partial or complete — there seems to be little belief that it will come before the business regains its footing. In the meantime, LPs [Limited Partners] like CalSTRS are unwilling investors.
“CalSTRS has requested and continues to push our partner, Cerberus, to sell holdings of Remington Outdoors from the investment pool in which CalSTRS is a limited partner,” said system spokesman Ricardo Duran. “However, despite CalSTRS’ continued pressure and Cerberus’ earnest efforts, Cerberus has not been able to sell the holdings, or to find a way out of Remington Outdoors to investors like CalSTRS. You will also notice, CalSTRS has not made additional investments into Cerberus funds since 2012.”
It is unclear if CalSTRS has attempted to sell its entire interests in Cerberus funds via the secondary market.
A Cerberus spokesman declined to comment.
As we said right from the git-go, it’s only a matter of time before Cerberus decides to cut bait and fish, breaking up The Freedom Group to sells its constituent parts. Which are now worth a lot less than they paid for them, but a lot more than nothing. We look forward to the day when careful caretakers can restore these storied brands to the former glory.