Remington Seeking DIP Financing to File for Chapter 11 Bankruptcy

[JohnS624]

It has more to do with companies inside companies and shell games of stripping profit from companies and then either letting fail or selling off the remains and taking a tax break on the losses.

Remington Outdoor Company (formerly known as Freedom Group) and the top of that pile was Cerberus. That is the company that bought up Chrysler when it was vulnerable and used it as a cash cow, then sold it off to allow it to bounce between the highest bidders. The same is happening here.

This "Remington Outdoor" holds the names of: Remington
Bushmaster
Advanced Armament
Marlin Firearms
H & R Firearms
Dakota Arms
Para USA
Parker Gun
Tapco
Barnes Bullets
Mountain Khakis

Yet, all the gun magazines and NRA went along with it and had articles where the Cerberus/Freedom Group execs would say "we're not investment bankers, we're gun people" and people believed them.

[10x25mm]

Ever since Marlin was bought by Freedom Group (now renamed to Remington Outdoor Co.) and they fired everyone at the 140 year old factory in North Haven, CT and moved lock stock & barrel to Ilion, NY, their quality went from Best in Class to absolute JUNK. For a year or so (2016), their quality began to improve, but lately, the pits again.

If I was going to buy a Marlin lever rifle, I would look for one made at the original factory (proof stamped 'JM') and built BEFORE 2008.

The quality issues which arose in Marlin firearms after the production move were due to the almost total absence of engineering drawings in the North Haven system. Marlin parts were produced on multiple single operation machines according to gauges, not blueprints. This was the universal practice of the firearms industry from Eli Whitney to WW II, but one not compatible with current single station CNC machining technology. The exclusive use of gauges declined during WW II after the Remington / Smith Corona Model 1903 Rifle fiasco and extensive delays launching other legacy weapons at new manufacturing sites. Marlin never changed.

Remington CMM'ed the Marlin gauges, but then had considerable difficulty establishing tolerances and GD&T calls. Remington's engineers say many Marlin gauges were very old and had been extensively modified. I don't believe that the Remington engineers were competent to undertake this dimensional transformation, but this same transformation vexed GM and other auto industry engineers during WW II. All the dimensional errors were exacerbated when the new Remington generated engineering drawings became the basis of CNC programs.

This said, the Marlin method of producing dimensionally accurate parts was long past economic viability and they were losing a lot of money. This despite having a very well engineered material flow through the North Haven facility. Why they were sold to Freedom Group in the first place. Had Freedom Group not bought Marlin and undertaken this transformation, Marlin would simply have folded during the Great Recession.

[10x25mm]

Cerberus Capital has filed Remington Outdoors for Chapter 11 bankruptcy and reached a 'Restructuring Support Agreement' with its major lenders. Cerberus is effectively turning over ownership of Remington to the lenders:

https://in.reuters.com/article/brief...s-idINASB0C567

BRIEF-Remington Announces Restructuring Support Agreement With Creditors
Reuters Staff - 12 February 2018

(Reuters) - Remington Outdoor Company Inc :

* REMINGTON OUTDOOR COMPANY ANNOUNCES RESTRUCTURING SUPPORT AGREEMENT WITH CREDITORS FOR A COMPREHENSIVE FINANCIAL RESTRUCTURING AND $145 MILLION OF NEW CAPITAL

* REACHED RESTRUCTURING SUPPORT AGREEMENT WITH CREDITORS HOLDING A MAJORITY OF FGI OPERATING COMPANY TERM LOANS DUE IN 2019​

* RESTRUCTURING SUPPORT AGREEMENT PROVIDES FOR REDUCTION OF ABOUT $700 MILLION OF REMINGTON‘S CONSOLIDATED OUTSTANDING INDEBTEDNESS

* CO‘S BUSINESS OPERATIONS WILL CONTINUE TO OPERATE IN NORMAL COURSE AND WILL NOT BE DISRUPTED BY RESTRUCTURING PROCESS

* WILL ARRANGE A NEW ASSET-BASED LOAN FACILITY AT EMERGENCE, PROCEEDS OF WHICH WILL REFINANCE EXISTING ABL FACILITY IN FULL​

* UNDER RESTRUCTURING SUPPORT AGREEMENT, CO WILL PROVIDE A $45 MILLION DELAYED DRAW FIRST-OUT FIRST LIEN TERM LOAN TO FGI OPERATING CO

* CONSENTING CREDITORS WILL PROVIDE A $100 MILLION DEBTOR-IN-POSSESSION TERM LOAN TO FUND COMPANY‘S CHAPTER 11 CASES

FGI= Freedom Group, Inc.

[MichMass]

I know that my '80's vintage 870 wingmaster is the smoothest and fastest shotgun that I have ever used. By fastest I mean not just cycling, as , many a set of panties here would be bunched by the suggestion that it would be faster than a semi, but speed of cycling combined with target acquisition. Nothing is even close when that covey of stubborn quail explodes skyward or the half dozen teal buzz your spread. Now my son's much newer 870 is a fight to cycle and doesn't want to follow those birds at all. Wouldn't buy a new one unless it was take ot apart and figure out how the screwed it up so badly. It brings to mind how the original C3 Corvettes were art that would scare the bejesus out of you while you giggled with joy and the '75 forward would bore you to sleep. Both had to be intentional, willful, and malicious.

[DP425]

There is a LOT more involved with this than just an appearance of slipping quality.

Yeah, like failing to innovate, and putting out products that no one really wants. Or just failing to update the machinery they use to build current products, which would improve the quality of said product (Rem 700 anyone??).

Of course you also have the stereo typical bloated and over-paid administration.

[SteveS]

The quality issues which arose in Marlin firearms after the production move were due to the almost total absence of engineering drawings in the North Haven system. Marlin parts were produced on multiple single operation machines according to gauges, not blueprints. This was the universal practice of the firearms industry from Eli Whitney to WW II, but one not compatible with current single station CNC machining technology. The exclusive use of gauges declined during WW II after the Remington / Smith Corona Model 1903 Rifle fiasco and extensive delays launching other legacy weapons at new manufacturing sites. Marlin never changed.

Remington CMM'ed the Marlin gauges, but then had considerable difficulty establishing tolerances and GD&T calls. Remington's engineers say many Marlin gauges were very old and had been extensively modified. I don't believe that the Remington engineers were competent to undertake this dimensional transformation, but this same transformation vexed GM and other auto industry engineers during WW II. All the dimensional errors were exacerbated when the new Remington generated engineering drawings became the basis of CNC programs.

This said, the Marlin method of producing dimensionally accurate parts was long past economic viability and they were losing a lot of money. This despite having a very well engineered material flow through the North Haven facility. Why they were sold to Freedom Group in the first place. Had Freedom Group not bought Marlin and undertaken this transformation, Marlin would simply have folded during the Great Recession.

I’d heard part of this before, but thanks for sharing the “rest of the story.” Marlin purists like to moan about Remlins and seem to paint a much different picture of the acquisition of the company.

[10x25mm]

I’d heard part of this before, but thanks for sharing the “rest of the story.” Marlin purists like to moan about Remlins and seem to paint a much different picture of the acquisition of the company.

Same story played out at Ithaca Gun, but no one with capital and engineers rescued them. The Sandusky, Ohio legacy company seems to have finally worked things out, but the new Ithaca's are quite expensive.

This is also why a number of legacy firearms at other manufacturers disappeared. The Winchester transformation in 1964 was hobbled by the absence of CMM's, which hadn't yet been invented. Why "post 64" Winchesters had such a poor reputation, although most of their issues were worked out by 1970.

Miroku in Japan is the master of these transformations. They have engineers, not designers.

[SteveS]

Miroku in Japan is the master of these transformations. They have engineers, not designers.

I have a O/U 12 gauge made by them that my grandfather picked up in the late 1960s.

[DEVIL DOG]

Saw an episode on The Sportsman's Channel about the Remington Custom Shop. Wow ! No junk coming out of there. There are still some real craftsmen out there, but the cost of those guns are way out of my reach. I just hope the owners can pull this off. Would be a shame to lose this icon of the gun industry.

[10x25mm]

Reuters, a powerful business information distributor, is recommending that financiers force gun makers to stop producing AR-15's and other semiautomatic rifles as a condition to receive continued financing. Reuters is focused on the DIP financing for bankrupt Remington Outdoors. but go further and suggest financiers also starve Sturm Ruger, Vista Outdoor, and American Outdoor Brands of capital as well. All produce semiautomatic rifles.

This is, of course, a response to the Florida high school shooting:

https://www.reuters.com/article/us-f...-idUSKCN1FZ2UD

Breakingviews - Cox: Wall Street's antisocial role in selling guns
Rob Cox - February 15, 2018 / 4:15 PM

NEW YORK (Reuters Breakingviews) - When does taking a stand against social harm outweigh a financial objective? It’s a reasonable question for the likes of Lazard and BlackRock. The Wall Street investment bank advised AR-15 maker Remington on its restructuring days before Wednesday’s school shooting in Florida, perpetrated with a similar rifle – yet its asset managers talk about responsibility. So does Larry Fink, who runs BlackRock, the $6 trillion fund-management giant and top owner of firearms makers’ shares. They could be helping reduce American carnage.

Fink’s missive to occupants of corner offices this year was, as he surely intended, widely interpreted as a shot across corporate America’s bow. “Society is demanding that companies, both public and private, serve a social purpose,” Fink wrote a month ago. “To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society. Companies must benefit all of their stakeholders, including shareholders, employees, customers, and the communities in which they operate.”

Like BlackRock, Lazard’s investment-management arm embraces principles of responsibility and good stewardship. These are, however, hard to square with the blue-chip firm’s advisory experts doing work intended to make Remington a more financially robust seller of deadly firearms.

Wall Street can’t on its own prevent school shootings like this week’s atrocity at Marjory Stoneman Douglas High, church massacres such as the one at Sutherland Springs, Texas in November, or the Las Vegas outdoor-concert bloodbath in October. Solving America’s exceptional gun-violence epidemic is a job where lawmakers in Congress need to show leadership. But financial-industry luminaries could make a difference – while also minimizing one risk to their hard-won reputations.

A day after the latest American mass shooting involving a military-style assault rifle, it is worth reviewing Fink’s words. BlackRock is the largest owner of shares in publicly traded manufacturers of what is arguably the most lethal consumer product of any kind. The firm’s funds hold 16 percent of Sturm Ruger, 12 percent of Vista Outdoor and around 11 percent of American Outdoor Brands, the parent of Smith & Wesson, according to Eikon.

BlackRock’s holdings are driven by its big indexing business, but it is not alone. Vanguard, which oversees $4.5 trillion of other people’s money, is the second-biggest owner of Sturm Ruger and a close third in the registers of AOB and Vista. Fidelity Management tops the roster at Vista with 15 percent, but doesn’t figure in the other two.

These increasingly engaged broad-brush investment firms, as well as more focused Wall Street advisers, could start with a simple thesis. Something common to most of the shooting horrors in recent years is the AR-15 class of semi-automatic weapons. In a country with as many firearms as people, eradicating murders, suicides and accidental deaths may never be possible. But reducing the lethality of those who would do harm is achievable by making these weapons – which were adapted from versions designed for military use on battlefields – harder to purchase or banning them outright, as some states have already done.

Denying the purveyors of assault rifles the financial means to produce and distribute them is a power that financial firms do possess. Many banks and brokers already avoid the gun industry, which scores low on most so-called ESG screens – for environmental, social and governance – in part because of the regular controversies surrounding the lethal misuse of their products.

To be fair to Lazard, its work for Remington was part of a long-standing relationship with Cerberus, the private-equity firm that acquired a number of gunsmiths, including the maker of the Bushmaster that was used to murder first-graders and teachers at Sandy Hook Elementary School in Newtown, Connecticut, in 2012. The firm was hired by Cerberus days after that tragedy, when pension funds threatened to withdraw their money.

In one sense, the goal was to help its client get out of the gun trade, a mission that will presumably be accomplished in a few weeks when nearly $1 billion of Remington debt will be converted into equity, none of which will be owned by Cerberus.

That should end Lazard’s involvement, but it will usher in a new set of owners for the maker of the Panther Arms DPMS GII rifle, which it markets as “Designed II Dominate.” Among the new shareholders, according to Reuters, may be Franklin Templeton and the asset-management arm of JPMorgan.

JPMorgan, for its part, is distancing itself from Remington ahead of the deal. “We are not an intentional shareholder, and we do not intend on being a long-term shareholder,” the company said in a statement. “Our asset-management group historically owned some of the company’s high-yield debt on behalf of its clients, and that debt is now being converted into equity. Any holding we have would be minority, passive and temporary.” That’s arguably the safest position to take for the largest U.S. bank.

But a more active approach to Remington and other makers of weapons targeted at consumers could serve the broader public benefit of reducing gun violence. The new investors could, for instance, insist on an end to the production and marketing of AR-15s and similar hardware, encourage smart-gun safety technology, or even urge reduced funding for the National Rifle Association’s political campaigns.

With Remington, a new group of owners is about to take over and they need to consider their collective priorities. BlackRock, though, has easy access to Sturm Ruger, Vista and AOB as a leading shareholder.

With 17 families in Florida preparing to bury sons, daughters, brothers and sisters, Fink could pick up the phone to just three CEOs and remind them of what he asked on behalf of BlackRock’s clients just last month: “To demonstrate the leadership and clarity that will drive not only their own investment returns, but also the prosperity and security of their fellow citizens.”

This is not a threat to be taken lightly. Financiers are not our friends and could successfully blackmail the largest gun makers. While it would not end the production of semiautomatic rifles at smaller makers, it would crimp overall production severely and drive prices through the roof.