Amid declining sales, gunmaker Remington prepares for bankruptcy filing

Doug Mendoza
February 16, 2018

Remington Outdoor Company, one of the largest gun makers in the country, reached a restructuring support agreement with creditors to reduce outstanding debt and fund operations during bankruptcy proceedings.

A preset reorganization will be filed with the federal bankruptcy court in DE that will allow Remington to continue operating while it works out a strategy to pay back creditors and get the business back on its feet.

The plan would allow Remington Outdoor Company to stay in business while restructuring its debt.

According to a news release, creditors, identified as term loan lenders, would own 82.5 percent of the equity in a reorganized Remington.

In addition to Remington, Sturm, Ruger & Co. and American Outdoors Brands Co., have also experienced declining sales since Trump's election.

Cerberus Capital Management, the company that controls Remington, will lose control of the gunmaker in the deal.

Remington's latest woes began with the election of President Trump.

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Remington employees' wages and benefits won't be affected by the deal, according to the report by Reuters.

"Difficult industry conditions make today's agreement prudent", executive chairman Jim Geisler said. In the first three quarters of 2017, Remington's sales fell 27.5% to $466.7 million, pushing it into the red. We will emerge from this process with a deleveraged balance sheet and ample liquidity, positioning Remington to compete more aggressively and to seize future growth opportunities.

Remington has taken to date a $33.2 million impairment charge for fiscal 2017, compared with $2.3 million a year ago.

A lawsuit filed by family members of the Newtown tragedy victims says Remington should not have sold such a unsafe weapon to the public.

Remington was also sued by the loved ones of those killed in the 2012 Sandy Hook massacre, who alleged that the company was responsible for the shooting because of the way it marketed its Bushmaster AR-15 assault rifle.

"Hillary Clinton's defeat meant customers became less anxious about losing access to weapons", Bloomberg reported.

According to the Federal Bureau of Investigation, the number of background checks of prospective firearms buyers, a proxy for gun sales, fell again in January compared to a year earlier, continuing a trend of declines for almost every month in 2017.

Other reports by GizPress

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