According to Reuters, gun manufacturer Remington Outdoor Company Inc. is sitting on a $950 million pile of debt and is trying to figure out a way to “restructure” it.
Remington is seeking debtor-in-possession financing that will allow it to fund its operations once it files for bankruptcy, the sources said. The size of the financing and timing of Remington’s bankruptcy plans could not be learned.
Some potential financing sources, including credit funds and banks, have balked at coming to Remington’s aid because of the reputation risk associated with such a move, according to the sources.
Remington, which is controlled by buyout firm Cerberus Capital Management LP, was abandoned by some of Cerberus’ private equity fund investors after one of its Bushmaster rifles was used in the Sandy Hook elementary school shooting in Connecticut in 2012 that killed 20 children and six adults.
This follows with the great, but predictable, irony that gun sales in America have come way down since the screeching gun-nut lobby finally got all of its candidates into office.
Gun giant Smith & Wesson, which has renamed itself American Outdoor Brands, said that its quarterly net sales haddeclined nearly 40% in the fiscal quarter ending July 31. That’s $78 million in fewer overall sales, and the drop may be closer to $100 million year-over-year if you’re only taking firearms revenues into account.
Remington’s sales have been experiencing the “Trump slump.”
Indeed, this morning, Remington Outdoor disclosed a dramatic plunge in earnings for the third quarter of 2017. Adjusted EBITDA fell by 78% year-over-year to $7.4 million, on net sales of $154 million, down 30%.
The “Trump Slump” in gun sales has had a punishing effect on the stocks of US-based firearms manufacturers. Publicly-traded Sturm Ruger & Co and American Outdoor Brands have shed 27% and 43% in market capitalization, respectively, since mid-June, as consumer urgency to stockpile has receded under the unified Republican-led administration and Congress.
When your business model is predicated that some invisible boogieman is going to take away your guns unless you buy all of the guns now, you aren’t really building for much of a future, I guess. I wish I could stand outside of all the gun manufacturers’ offices and laugh so hard their walls shook.