Remington set to file for bankruptcy
Where's Hillary Clinton when the gun industry needs her? The Democrat's election loss to Donald Trump was cheered by the National Rifle Association and other gun lobbyists, given the current U.S. president's commitment to allowing unfettered access to firearms.
However, with customers less concerned that their ability to accumulate guns might be cut off, retailers that had built up inventory anticipating a Clinton presidency found themselves with lots of unsold guns on their hands.
Gunmakers including Remington Outdoor took a hit, and the Madison, North Carolina-based company on Monday said in a statement that it intends to file for Chapter 11 bankruptcy protection after reaching an accord with lenders that grants them ownership of the 200-year-old company.
"Difficult industry conditions make today's agreement prudent," Jim Geisler, executive chairman of Remington said in the release.
A preset reorganization will be filed with the federal bankruptcy court in Delaware 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.
Holders of Remington's $550 million term loan will get an 82.5 percent equity stake in the gunmaker, and third-lien note holders will get 17.5 percent of Remington and four-year warrants for a 15 percent stake, the gunmaker's statement said. Creditors will also grant a $100 million debtor-in-possession loan to keep Remington running through bankruptcy.
Beyond presidential politics, the Remington brand drew unwanted attention as well as lawsuits after the 2012 slayings of 20 children and six adults at an elementary school in Newtown, Connecticut, in which the gunman's weapons included a Remington Bushmaster assault rifle.
Cerberus Capital Management, which holds a controlling interest in Remington, confirmed the bankruptcy plan, first reported by Reuters last week, but declined further comment. Cerberus said questions should be directed to the company. Remington did not immediately respond to a call requesting comment.
While Remington is privately held, shares of publicly traded gunmakers fell on Monday, even as the overall market gained. Sturm, Ruger (RGR) fell 2.5 percent, and American Outdoor Brands (AOBC) also lost ground, off 1.3 percent.