Remington Arms Sets Up for Bankruptcy Filing
It’s been a rough year or so for gunmakers. Absent the fear among gun owners that the federal government will in some way restrict gun purchases and ownership, gun sales have tanked.
In an exclusive report, Reuters cites people familiar with the matter who say that iconic gunmaker Remington Arms is searching for financing to allow the firm to file for bankruptcy protection. Remington has been trying to restructure its $950 million debt load ahead of a $550 million term loan maturing next year.
The maturing loan is trading at about a 50% discount to full value and a $250 million loan is trading at around $0.16 on the dollar, according to Reuters.
But the company’s debt load is just one part of Remington’s problem in rounding up financing. The other big issue is reputation risk.
The firearms maker is controlled by private equity firm Cerberus Capital Management and, according to Reuters, some of the firm’s investors refused to put more money into Remington following the school shooting in Sandy Hook, Connecticut, that left 20 children and six adults dead. A Remington Bushmaster rifle was used in the killings.
Other U.S. gun and ammo makers have had a lousy year. Shares of Smith & Wesson maker American Outdoor Brands Corp. (NASDAQ: AOBC) have tumbled more than 50% in the past 12 months. Sturm Ruger & Co. Inc. (NYSE: RGR) is down about 18%, and ammo maker Vista Outdoor Inc. (NYSE: VSTO) had traded down about 36% before reporting better-than-expected results last week and recovering about 13% in a couple of days.
Remington’s sales for the first nine months of last year were down 27%, and the company posted an operating loss of $28 million during that period.