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Remington reeling from lawsuits and slump in sales, prepares to enter bankruptcy

15 February 2018

Firearm maker Remington Outdoor Co.

Remington Outdoor Co. said Monday it will enter Chapter 11 bankruptcy protection with a restructuring plan created to reduce much of its $950 million debt and provide $145 million in new capital.

The company, which is controlled by private-equity firm Cerberus Capital Management, said Monday it had reached an agreement with creditors that would slash its debt by about $700 million and provide about $145 million of new operating capital, "markedly strengthening the company's consolidated liquidity, balance sheet, and long-term competitiveness".

To view the full article, register now. That made it hard for the company to attract new investors. Through the third quarter of previous year Remington's sales had fallen by 27.5 percent, to $466.7 million, and its net income had fallen from $19.1 million in 2016 to a $60.5 million loss. After the Sandy Hook shooting, Cerberus Capital failed to sell Remington, then known as Freedom Group, even as some investors exerted pressure on Cerberus to do so.

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The planned Chapter 11 filing is a recognition of Remington's struggles amid declining sales linked, at least in part, to reduced fears among gun owners that the US government will impose more regulations on buying firearms.

The prepackaged plan would also transfer 82.5 percent of the company's equity to term loan lenders and the remaining 17.5 percent to third lien noteholders, the company said. The company's fortunes took a hit after the election of Donald Trump, a self-proclaimed "true friend" of the gun industry, because Hillary Clinton's defeat erased fears among gun enthusiasts about losing access to weapons.

FILE - In this January 15, 2013, file photo, Remington rifle cartridges are displayed at the 35th annual SHOT Show in Las Vegas.

In the nine months ended October 1, Remington Outdoor showed a net loss of $60.5 million against earnings of $19.1 million in the same period a year ago.

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Mayodan resident Tyres Tatum, who also is running for county commissioner this year, has operated Shooters Incorporated, a concealed-carry training company, since 2004.

Investment expert Louis Navellier, chairman of Navellier Associates, has said Obama "is the best gun salesman on the planet".

The Trump administration is a major supporter of the Second Amendment, and other gun companies such as American Outdoor Brands and Sturm Ruger have both reported having lost money since Trump's election. Between December 2015 and December 2016, the Federal Bureau of Investigation reported record numbers of background checks.

Ruger confirmed January 8 it has eliminated 50 non-production jobs companywide. The families of the victims of the shooting have a pending lawsuit against Remington. Remington's lawyers have disputed the allegations. Feinberg's firm, Cerberus Capital Management, acquired Remington in 2007 and subsequently saddled it with nearly $1 billion in debt.

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Remington reeling from lawsuits and slump in sales, prepares to enter bankruptcy