A federal judge approved a $75 million loan Tuesday to keep Remington in business as it navigates Chapter 11 bankruptcy proceedings, court records show.
The 200-year-old gun maker filed in Delaware bankruptcy court Sunday, seeking to restructure a nearly $1 billion debt load after reporting weak sales throughout the year. The company turned a profit of just $21.6 million in 2016.
Sarah Foss, a legal analyst at Debtwire, told CNN Money the loan represents the”interim amount to get them through the interim period until they get to that final hearing on the additional amount that they’re going to need.” Remington asked for up to $338 million by April 29, according to CNN.
The money, though just a fraction of what Remington needs, will help the company make payroll and churn out firearms — just as it has since Eliphalet Remington assembled his first hand built rifle in 1816.
Cerberus Capital, a private investment firm, bought the company in 2006 in hopes of launching a multi-brand publicly-traded conglomerate headlined by the iconic gun maker. Investors began pulling out of the group, however, after a lone gunman shot and killed 26 students and teachers at Sandy Hook Elementary School armed with a Bushmaster rifle.
Remington fell on harder times still after President Donald Trump’s surprise electoral victory left the industry flush with inventory and short on buyers. Competitors Smith & Wesson and Sturm, Ruger and Company reported depleted earnings throughout 2017 as fears of looming gun control waned.
The company delayed plans to file for bankruptcy protections after a school shooting in Parkland, Florida claimed 17 lives. The ensuing heightened political tensions encouraged corporations and financial institutions to rethink their relationships with the gun industry — a fact Remington fears could hurt future profits.
Once it completes its 45-day bankruptcy plan, Cerberus will turn ownership over to Franklin Resources Inc. and JPMorgan Asset Management.
Kevin Cassidy, an analyst at Moodys Investor Service, said Remington faces an uphill battle against fluctuating attitudes toward gun ownership.
“It absolutely hurts them, being in this kind of industry,”he told Bloomberg. “Just like some funds no matter what won’t invest in tobacco, there are investors now that feel the same about gun companies.”