Remington Pursues Bankruptcy to Reduce Massive Debt
Remington Outdoor Company Inc. (Remington) will file for Bankruptcy in the Delaware Federal Court. The North Carolina-based company is pursuing Chapter 11 Bankruptcy to reduce its $950,000,000 in debt. According to Reuters, Remington hopes to work out an agreement with its creditors to write off about $700 million in debt obligations. That would permit Remington to sustain manufacturing operations and retain most of its work-force. In announcing the Bankruptcy filing, Remington executives stated that the company will continue to operate as usual during the bankruptcy proceedings.
(Reuters) – Remington Outdoor Company Inc., one of the largest U.S. makers of firearms, said on Monday it had reached a deal with its creditors to file for Chapter 11 bankruptcy to slash its $950 million debtload. Remington said it will receive $145 million in bankruptcy financing to fund the company through the Chapter 11 process.
Cerberus Will Yield Control of Remington to Creditors
If the pending deal with creditors goes through as planned, Cerberus, the private equity group that currently controls Remington, will lose ownership of the company. Through the bankruptcy, according to Reuters: “the company’s creditors, which include Franklin Templeton Investments and J.P. Morgan Asset Management, will exchange their debt holdings for equity in the company.”
Two months ago, AccurateShooter.com noted that Remington was considering Bankruptcy. Our report noted that an earnings decline left Remington few options. In early December, Fox News reported: ““The rifle and shotgun manufacturer’s third-quarter sales plunged 41% as demand for firearms dried up. That led Remington to report adjusted earnings before interest, taxes, depreciation, and amortization that were 78% lower year over year. Over the first nine months of 2017, the company has produced a $60.5 million net loss, compared to a $19.1 million gain in the prior-year period. And with its credit rating in the trash bin, the future is bleak for ‘America’s oldest gunmaker’. Today, debt on the company’s books has ballooned to almost $1 billion[.]”
Remington Has a Storied History
Founded in 1816 by Eliphalet Remington in New York, Remington is the oldest continuously-operating gun manufacturer in the United States. Even with its present difficulties, Remington still sells more sporting rifles and shotguns than any other American company. Remington has developed more cartridges than any other U.S. company. And it is the only American company that sells firearms AND ammunition under its own name.
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They should have left NY state.
What a shame that such a fine old American company has come to this. No doubt greed and poor management on the part of Cerberus has brought them down.
Lets hope they can come out of Chapter 11 in one piece, and continue to give us their fine firearms!
How does a gun manufacturer end up with almost a billion in debt? They should’ve made cuts years ago rather than constantly borrowing money.
no company is protected from bad management…
This is the exact same scenario with the exact same players that bankrupted the company that I worked for. What these vulture capitalists are doing should be illegal. Remington will never be the same.
At least some of this has to do with their failure to innovate, although I’m sure poor management/Cerberus didn’t help the situation. Look at what Ruger (privately owned) managed to do with the RPR. Look at what Q has done with the fix. Look at what other companies have come up with to advance their military product lines. The bulk of what Remington has done over many years is crank out slightly different variations of the 700 and 870 while other companies have innovated and advanced the state of modern firearms. The fact that they’re a large company which could have spent a good chunk of money on R&D and chose not to, a decision made potentially due to poor management, is why they’re in this situation. Adapt or perish, and it seems as if they failed to adapt.
I just can’t grasp how in the hell a company’s management would be ok with reaching that amount of debt. Not like they woke up one morning and said “Damn, would you look at that. We’ve accrued damn near a billion dollars worth of debt. Wonder what we should do?” Kind of reminds me of a politician.
There is a very old saying in the Golf industry . “Never let the accounting dept. run the golf course”. Think that more than applies here , too . Remington probably got into this mess by letting a bunch of bean-counters make decisions based on some “Accounting Business Model” , developed by some clown in the “Ivory Tower” , who had never run a business in their life . Hmmmm . Sounds like the way our Govt. has been run for a long time , and the result appears to be the same . Makes ya wonder who got the kick-backs here , doesn’t it ?
look for the “Golden Parachute” numbers. That will be the answer to “how did we get nearly a billion dollars in debt in ten years?”.
CERBERUS only paid $215 for them about ten years or so ago.
The saddest part is that they cannot blame the Union for this mess.
The best part, the companies they owe big $$$ to are going to get the company away from CERBERUS.
Remington’s problem was poor management, buying a huge facility in Huntsville AL. Thinking you can have pump action and bolt action people make lever actions and move Marlin from CT. Move Bushmaster to NY just to move it again to Huntsville. Move DPMS from MN to Huntsville. Move Para from NC to Huntsville. Take people who have never built guns and have them make all the Huntsville firearms. That does not even mention the companies they purchased just to move equipment (no operators) to Huntsville. I could go on but you get the picture. The management decided to race everyone to the low rung on the quality and price ladder which does not give you enough capital for those kinds of major moves to be profitable. I really hope they make 205 years.
company must be run by the people of proffesion of it’s product, in this case by egineers, not by economists…
Manchurian Candidate. There is no certainty that those who can afford to buy stakes in this industry actually appreciate it.
The company has been very short sighted for far too many years. Falling out of touch with customers. Indifferent quality and customer service. Failure to update production machinery. If it could be done poorly, they did. Labor and a not friendly state didn’t help, but they were not the major problem.
Toss in some debt from the acquisition and you have a recipe for a reorganization. I hope that there will be new management who can deal with modern manufacturing processes, new production equipment and a focus on producing quality products people actually want at prices that will sell.