“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,” reuters.com reports. “The move comes as Remington reached a forbearance agreement with its creditors this week following a missed coupon payment on its debt.” OK, so BIG problem . . .
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.
A problem that first reared its ugly head when Cerberus private equity tried to off-load [what was called at the time] The Freedom Group, after the Newtown spree killer used a Bushmaster (a brand owned by TFG) AR-15 to commit his heinous crime. An event that inspired the California teachers’ union to demand that Cerberus divest of TFG.
Even so, most of TFG/Remington Outdoors’ problems have been self-inflicted.
The conglomerate has burned through non-firearms-experienced CEOs (e.g., Chrysler-killer Robert Nardelli) and Six Sigma-ed product quality to death. Marlin, the ill-fated R51, the Remington 700 recall — the company couldn’t buy a break. Literally.
TTAG’s been monitoring Remington Outdoors’ fall since 2014. Click here to peruse our coverage. In it, we’ve revealed that Remington Outdoors’ [most recent] new management has been turning the conglomerate around, steadily improving product quality and moving production South.
Too little too late — especially as the company has been sailing into post-Trump product glut headwinds.
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.
Lest we forget, Cerberus turned to Uncle Sam when its Chrysler investment went south. As mentioned above, the conglomerate’s beyond the pale, PR-wise. So the forces of creative destruction are catching up with Remington without a taxpayer handout in sight.
As we predicted so long ago, Remington Outdoors will likely sell off its top shelf brand assets as it attempts to salvage something for its creditors on its way to the ash heap of history (ass cheeks of history?). Where it will remain an example of how to gather and kill multiple golden-egg-laying geese.