One of the country’s biggest gun manufacturers, Remington Outdoor Company, filed for Chapter 11 bankruptcy protections on Sunday. Remington, which owns more than a dozen brands, followed through with plans announced last month to restructure the company’s nearly $1 billion debt load.
With a pre-packaged bankruptcy plan, the North Carolina-based company will reduce the debt size by some $620 million, according to filings with a Delaware bankruptcy court.
Remington generated $865.1 million in sales and $21.6 million in profit in Fiscal Year 2017, the last full year publicly reported, but owes approximately $958 million. Then, three quarters into FY2018, the company reported a $60.5 million loss on $466.7 million in sales.
The bulk of Remington’s debt comes from a $550 million loan and another $250 million in bonds, which the company had payments due in 2019 and 2020. The majority of that debt is owed to lenders like Franklin Resources and JP Morgan.
In the bankruptcy petition, Remington also lists the 30 largest unsecured claims. The top two include pensions for which it owes an undetermined amount. The third is a materials supplier owed $3.1 million. However, the majority of others are also suppliers owed amounts in the hundreds of thousands to just over a million.
Although Remington is one of the oldest and most iconic gun makers in the country, it emerged as a firearm conglomerate in 2006, when investment firm Cerberus Capital began buying gun manufacturers. Initially launching as Freedom Group, the company re-branded early in 2013 after Cerberus’ owner had a change of heart.
The goal with Freedom Group was to build a collection of firearm brands, make them profitable and then turn the company public. But after one of its products was used during the 2012 Sandy Hook shooting, which ignited a volatile debate on gun control, the owners wanted to cut ties and allowed investors to pull funds.
The bankruptcy filing comes at a similar time in history, one that delayed the company’s bankruptcy filings. The company announced plans for restructuring just days before a mass shooting at a school in Parkland, Florida, left 17 people dead and 15 others injured. The incident sparked a protest that has influenced banks and investors as well as other entities in corporate America to review their ties to the gun industry.
In the bankruptcy plan, Remington lists corporate backlash as a possible risk that could impact future earning potential. Retail giant Walmart, which accounted for 11 percent of Remington’s sales in 2017, and Dick’s Sporting Goods adopted new policies to prohibit sales to anyone under the age of 21.
Remington’s plan sets the voting deadline for those with a claim to accept or reject final arrangements on April 26. The company has also said that it will continue to operate during the transitional phase.
Once the company emerges from bankruptcy proceedings, a “reorganized” Remington will be valued between $470 million to $615 million. The plan also offers financial projections out to 2022. This year, the company projects some $395.9 million in sales and to double that figure by 2020.
