Cerberus’s Remington Gunmaker Seeks Bankruptcy Shield From Debts
(Bloomberg) -- Remington Outdoor Co., the 200-year-old maker of rifles, handguns and bullets controlled by Cerberus Capital Management, filed for bankruptcy, after the election of a “true friend” to the White House ironically wound up stifling sales.
The chapter 11 filing in Delaware bankruptcy court lists estimated liabilities of $100 million to $500 million. Remington, which makes weapons for military, law enforcement, and hunting customers, disclosed plans for the bankruptcy on Feb. 12. A deal had already been negotiated with lenders that would cut debt by about $700 million and inject $145 million of new capital into the Madison, North Carolina-based company.
The Chapter 11 filing allows Remington to keep operating, and the deal with lenders is subject to court approval.
Remington’s fortunes took a hit after the election of Donald Trump, a self-proclaimed “true friend” of the gun industry. Gun enthusiasts traditionally stock up on firearms at times when political winds suggest tighter gun control lies ahead. But Hillary Clinton’s defeat erased those fears, leaving retailers stuffed with unsold inventory.
Other setbacks have included an aborted public offering in 2011 and an investor revolt after one of its rifles was used in the Sandy Hook Elementary School mass shooting.
The troubles have been a blow to Cerberus, owned by private-equity billionaire Stephen Feinberg, who has been a prominent Trump supporter. New York-based Cerberus acquired Remington in 2007 and saddled it with almost $1 billion in debt.
Concerns about rising gun violence, mass shootings and accidents have prompted litigation, some of it including Remington. In 2016, the Massachusetts attorney general sought information from the company on complaints and recalls, citing an investigation into its compliance with state laws and regulations on gun safety. Remington has also been sued by individuals claiming some guns are defective, and voluntarily recalled some of its models.
The industry came under added pressure in February when a gunman using an AR-15 assault rifle was used in the Stoneman High School mass murder in Parkland, Florida, just days after Remington announced plans for a pre-arranged bankruptcy. That weapon was a Smith & Wesson, made by a unit of American Outdoor Brands Corp.
Remington, which began with a hand-built rifle in 1816, went on to supply more than half the ammunition used by U.S. and its allies in World War I and World War II, according to its website. It currently employs 3,500 people and is among the largest American manufacturers of ammunition and firearms.
More than 11 million firearms were manufactured in the U.S. in 2016, up from fewer than four million a decade ago, according to data from the Bureau of Alcohol, Tobacco, Firearms and Explosives.
Another pillar of American gun industry, Colt Holding Co., also took a trip through bankruptcy in 2015.
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