Remington may file for bankruptcy

[Dolomite_supafly]

https://www.reuters.com/article/us-remingtonoutdoor-bankruptcy-exclusive/exclusive-u-s-gunmaker-remington-seeks-financing-to-file-for-bankruptcy-sources-idUSKBN1FT04C

Quote

The move comes as Remington reached a forbearance agreement with its creditors this week following a missed coupon payment on its debt, the sources said. The company has been working with investment bank Lazard Ltd (LAZ.N) on options to restructure its $950 million debt pile, Reuters reported 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 in Connecticut in 2012 that killed 20 children and six adults.

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.

Lazard Ltd54.23

LAZ.NNew York Stock Exchange

--(--%)

• LAZ.N

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.

 

Edited February 9, 2018 by Dolomite_supafly

[Raoul]

The glorious results of capitalism run amuck.

 

[Ronald_55]

So are truck companies that built the trucks used in terrorism losing funding????

While Remington has its issues, losing a major brand would be bad. Either it is gone or gets bought for pennies by an investment group again. Then they sub out building guns to the lowest bidder. Lose-Lose situation.

[peejman]

It's been gone for years, they just won't bury it. Once a company gets into a position where being owned by the capital management hyenas seems like a good idea, its extremely difficult to recover. Even the massive surge over the past 6-8 years couldn't overcome nearly $1B in debt. 

 

[JAB]

It would be bad to lose an old name like Remington but, honestly, my main concern would be what that might do to the ammo market as they (with their UMC brand) are one of the big providers of cheap plinking ammo.  I also wonder how this would impact Marlin.  Now THAT is a brand I would really hate to lose.

[A.J. Holst]

I don't own any Remington firearms, but reading reviews of their failures in the budget poly handgun arena with the capital investment to build, market and distribute coupled with equivalent ARs (Ruger and S&W) for $100+ less, the results shouldn't be too surprising.

Add in the highly competitive accessory market and low margin, Walmart model  ammo revenue stream and reduce demand and hello bankruptcy.

Cerberus Capital didn't buy Remington to preserve and innovate the brand. They bought the brand to make money and killed the golden goose.

 

[Raoul]

Well I own some rather fine Remington firearms. Sad to see yet another American company bite the dust.

Wonder what part the lawyers and bankers played in this debacle?

 

[Garufa]

47 minutes ago, Raoul said:

Wonder what part the lawyers and bankers played in this debacle?

 

Is that a rhetorical question? 

It doesn’t help that Remington’s entry into the plastic-fantastic has been an utter failure, every Model 700 ever made has defective triggers, the overall quality of their products has been in serious decline, and they are ultimately owned by a company that is in the sole business of making money for their principles and investors.  A company that will move on when the entire Freedom Group is spent and wasted.

Edited February 10, 2018 by Garufa

[Raoul]

5 minutes ago, Garufa said:

Is that a rhetorical question? 

It doesn’t help that Remington’s entry into the plastic-fantastic has been an utter failure, every Model 700 ever made has defective triggers, the overall quality of their products has been in serious decline, and they are ultimately owned by a company that is in the sole business of making money for their priciples and investors.

Hard to refute any of that. As we say....bless their heart:-)

[zybysco]

I'm actually glad to hear this.  The current Remington is not the Remington of yesteryear. They make a low quality product and try to ride their previous reputation. Their customer service is atrocious. 

I'm still waiting on a rebate from two years ago. They received it, said it was good, then cleared it from their system. They said they cleared all the actual records out. Mine just had a note saying it was received after the date. I even had screenshots of showing when they received. They didn't care. After looking online, it seems to be the modus operandi. 

These huge conglomerates need to be allowed to fail.

[Garufa]

2 minutes ago, zybysco said:

These huge conglomerates need to be allowed to fail.

Unfortunately, the huge conglomerates have been chewing up and spitting out household names for a long time...and the few old names left in American gunmaking are all under the control of one or another.

[peejman]

28 minutes ago, zybysco said:

These huge conglomerates need to be allowed to fail.

If by "huge conglomerates" you mean the Cerebuses, Blackstones,  and Carlyles of the world, then I agree.  They exist solely to suck the marrow out of everything they acquire and throw it away when they're done. 

[Raoul]

This is the way it is. I still say....there's nothing wrong with the world that a deadly global flu pandemic wouldn't cure.

[Garufa]

12 minutes ago, Raoul said:

This is the way it is. I still say....there's nothing wrong with the world that a deadly global flu pandemic wouldn't cure.

You’d think it was 1918 all over again with all the hoopla and germ-bags walking around.  I’m feeling a bit of the grippe myself.

Further proof our high-dollar “best medical care in the world “ can’t predict jack as the shots this year were yet another fail. 

Edited February 10, 2018 by Garufa

[Ronald_55]

44 minutes ago, Raoul said:

This is the way it is. I still say....there's nothing wrong with the world that a deadly global flu pandemic wouldn't cure.

Sometimes I completely agree....

[DaveTN]

I hate to see any American gun manufacturer go bankrupt, but I doubt Remington goes quietly into the night. I know there are a lot of folks on the gun forums that have a lot of hate for them (as is with any brand you can name), but fact is they own the bolt action and shotgun market. They would be a great fit for American Outdoor Brands Corp (Smith & Wesson) to pick up, but I don’t see Cerberus admitting they can’t make a go of it. I mean let’s face it; buying companies in distress and bringing them back is their claim to fame; it’s what they do.

I don’t think the Remington 700, 870, and 1100 will go away. I just hope they aren’t bought by a foreign company, like happened with Winchester.

Edited February 10, 2018 by DaveTN

[btq96r]

The current Remington is not the Remington of yesteryear.

This.

I'm not sympathetic to the point of propping up a company just to keep a name in business. I want quality gun companies competing in the market, not famous names that are raided and reorganized to maximize shareholder benefits above good products and customer service.

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