In a surprising development, Bloomberg reports that Remington Outdoor Co., one of the most recognizable names in gun manufacturing, is filing for bankruptcy.
The move comes amid a deal to transfer ownership of the company to its lenders, reorganize, and work out a plan to pay off the company’s creditors and chart a new business strategy:
Holders of the gunmaker’s $550 million term loan will take an 82.5 percent equity stake in Remington while third-lien noteholders get 17.5 percent of the company and four-year warrants for a 15 percent stake, according to Remington. Creditors will also provide a $100 million debtor-in-possession loan to finance operations throughout bankruptcy […]
Remington’s fortunes took a hit along with other gunmakers after the election of Donald Trump, a self-proclaimed “true friend” of the gun industry. Hillary Clinton’s defeat meant customers became less worried about losing access to weapons. Sales plummeted, and retailers stopped re-ordering as they found themselves stuffed with unsold inventory they’d built up in anticipation of a Clinton presidency.
The company’s reputation also has hurt efforts to line up new investors. Remington came under unwanted scrutiny and litigation after the massacre of 20 children and six adults at the Sandy Hook Elementary School in Newtown, Connecticut, in which the gunman carried a small arsenal that included a Remington Bushmaster assault rifle.
Remington has been in business for over 200 years, dating back to 1816 when Eliphalet Remington II forged a rifle barrel and worked with a local gunsmith to create a flintlock rifle. It received its first contract in 1845, manufacturing 5,000 “Mississippi” rifles for the U.S. military. Today, the company employs 3,500 people and is among the largest American manufacturers of ammunition and firearms.
Advertisement – story continues below
It has long been an irony of the gun business that while leaders in power who respect the Second Amendment are obviously better for liberty and safety, fear of impending gun control tends to be a bigger boon to actual sales of firearms and ammunition (of course, retailers making hasty inventory decisions in anticipation of elections’ future results is another matter).
The report’s claim about Sandy Hook, however, strikes me as far more dubious. Of course liberals are going to take every opportunity they can to demonize gun manufacturers for what an owner does with the product, and we’ve certainly seen no shortage of media outlets happy to broadcast that fear-mongering far and wide, wouldn’t the type of investors gullible enough to fall from such fear-mongering have already decided long ago not to invest in the gun industry, leaving only investor who know better to compete for? In other words, it seems to me this is a variable that would already be priced into business considerations by now, for better or for worse.
In any event, what do you think about all of this? Share your thoughts in the comments below.
What do you think? Scroll down to comment below.