In a late Monday press release, the 200-year old Remington Arms company — officially Remington Outdoor Company — announced that it had reached a restructuring deal with its majority creditors and will file a prepackaged Chapter 11 plan to reorganize the company.
The restructuring agreement eliminates approximately $700 million of Remington’s outstanding $950 million debt load and contributes $145 million in new capital to keep the company operating through the Chapter 11 proceedings.
Executive Chairman Jim Geisler commented:
Since its founding over 200 years ago, Remington has been a uniquely American company and brand. Our longevity is owed to generations of loyal customers and hard-working employees who met challenges and delivered results. Difficult industry conditions make today’s agreement prudent. I am confident this regrouping ensures that Remington will continue as both a strong company and an indelible part of our national heritage.
The “difficult” conditions include an industrywide decline in gun sales following the election of President Trump. Ironically, perhaps, the president’s strong statements in support of the industry have calmed fears that government regulation will restrict gun sales and ownership.
Bloomberg News cited a research study conducted by Harvard and Northeastern universities that concluded that about half the guns in America are owned by only 3% of the adult population, with an average of 17 firearms each.
The gun industry’s common problem is that new guns were being purchased by people who already own multiple guns. Without the threat of new regulation — usually associated with a Democratic president and Congress — buyers became scarce.
Under the terms of Remington’s prepackaged bankruptcy, the firm will receive $100 million of debtor-in-possession financing. In exchange for forgiving $700 million in debt, the term-loan creditors will receive 82.5% of the equity of Remington and a prorated share of $2.67 million in cash when the company emerges from bankruptcy protection.