How did Roundhill buy the Remington Arms brand for only $13M?

mcb said:

1 million square feet... You could scrap all the machines in Ilion and get more than $13 million in scrap metal value. There is more than $13 million dollars in rotary hammer forges and rotary swaggers on the first floor of one of the larger buildings. There are over a dozen 4-story buildings at the Ilion site. The museum and gun-library could probably be auction for several million themselves. We have not even talked about the equipment and property at Storm Lake and the Custom Shop. $13 is a deal if you have the brains to manage it right.

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Once you have sold off those assets, you're still responsible for the remainder... .

DocRock said:

Because nobody outbid them.

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This.

A bunch of folk did the balance sheet, and all but one bidder decided that the difference between the documented assets and liabilities (and risks/opportunities) was LESS than $13M. We don't have line of sight to the documented liabilities, but presumably they are almost equal to the asset value that mcb described.

We know that there were many interested parties, all of whom were given access to the disclosures. The winning bid was just that - the highest bid offered. If it represented a bargain, I suspect that Ruger or any other entity that was poring through the books would have been happy to harvest the bargain.

mcb said:

There have been several threads on this. But in short a least one member of Roundhill has a long standing business relationship with the current CEO of Remington. It was all disclosed in the bankruptcy documents and yet still stinks to high heaven.

Roundhill for $13M got all of Remington's Ilion's facility (~1 million square feet) and most of the facilities equipment, except for the equipment the accountants said belong to Marlin. They also got the Storm Lake facility in Tennessee and the Custom Shop in South Dakota.

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They also bought the liabilities of Remington....

That will increase the cost a bit.

lysanderxiii said:

They also bought the liabilities of Remington....

That will increase the cost a bit.

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That is still fuzzy. Obviously most of the debt was erased. I have not see if this breaks the chain to the lawsuits. I am fairly certain that Franklin Armory is free and clear of the Sandy Hook lawsuit despite buying the Bushmaster name but its is not as clear for Remington's other lawsuits. The only clear liability in the bankruptcy paperwork is that they are obligated to hire at least 200 Mine Worker Union hour employee within 75 days of the sale being complete.

I wonder what this will bankruptcy did to the few remaining military and LEO contract Remington had. The military still has a heap of M24's, M40's, M2010's and a few PSR's out there that will eventually need refits and upgrades and Remington says its getting out of the LEO and Military business.

mcb said:

I wonder what this will bankruptcy did to the few remaining military and LEO contract Remington had. The military still has a heap of M24's, M40's, M2010's and a few PSR's out there that will eventually need refits and upgrades and Remington says its getting out of the LEO and Military business.

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Sooner or later the .gov will put out an RFQ, and everyone that does M700 accurizing will look hard at whether they can service the requisition. Given how ubiquitous the platform has become, I can't imagine that they won't be able to find somebody to support them.

Solomonson said:

Still, even with harsh competition from Mossberg/Maverick, I'm still amazed that Ruger didn't use this as an opportunity to jump into shotguns.

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Ruger knows its place.

It sticks to what it does best.

jmr40 said:

Correction, "Remington USED to make great/legendary....." The only current design that is relevant is the 870. Everything else they make has been surpassed in...

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VersaMax

V3

Friends own both, both are extra very nice. And lighter on the wallet then the spaghetti guns

I would buy a V3 in 20 gauge. But Remington refuses to manufacture it, no matter how many requests they get to do so

The Remington name is worthless, 13MM is too much, in my opinion.

Disclaimer: i haven’t read all of the declarations and filings related to this case.

however, there is a distinct possibility that Roundhill had a claim against Remington, and the opportunity to buy was part of a settlement claim of some sort. Perhaps it was a first right of refusal/sole purchase opportunity allowed by the judge, where the claim is offset by the purchase, and roundhill ponies up the difference.

Sovblocgunfan said:

Disclaimer: i haven’t read all of the declarations and filings related to this case.

however, there is a distinct possibility that Roundhill had a claim against Remington, and the opportunity to buy was part of a settlement claim of some sort. Perhaps it was a first right of refusal/sole purchase opportunity allowed by the judge, where the claim is offset by the purchase, and roundhill ponies up the difference.

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Roundhill is not one of the companies owed money by Remington. They are not listed as debt holder. Roundhill Group LLC is made up of a small group of individuals that at least one of which is a business partner of the current Remington CEO in separate ventures. This is all disclosed in the bankruptcy documents if you dig through them.

No doubt legal, apparently, but it seem rather shady when Remington's CEO Ken D'Arcy puts the company into a second bankruptcy within a year of taking the reigns (and only two years after the previous Bankruptcy) and when the dust settles from the bankruptcy the new owner of Remington Firearms includes a person (Richmond Italia) that is owner and on the board of directors of a third company (GI Sportz) that Ken D'Arcy Remington's CEO is also a board member of. D'Arcy coup de grâce the countries oldest gun company and yet gets to keep his job cause his business partner helped him buy the company for pennies on the dollar.

There is a lot of information in this thread. I do wonder about the disparity in price between what Marlin went for compared to Remington. 30 million compared to 13 million.
I am just saying seems to be a big difference for 2 historic firearms companies.

Disclaimer: I am not a business man, lawyer or financial professional. I am just stating the obvious.

WestKentucky said:

Cutting fluids almost certainly, likely bluing chemicals, possibly chrome plating compounds. Abatement nightmare.

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I've been involved in the Superfund clean up of several old chrome plating facilities. They are indeed a nightmare of toxic chemicals and even a small facility can cost millions to remediate if it was run sloppily (and many were).

These things have many facets, some less-obvious than others, even if important to the process.
Facility issues can be huge.
A fully-owned building often comes without any favorable depreciation for tax purposes, which makes it less of an asset on the balance sheet. Buildings with considerable potential for externally-required clean ups make that even worse.
Machinery is another issue that seems obvious but isn't. Modern machining often uses single-point machines, machines that only perform a single machining process. Which is efficient when you have ten of them each executing a that step at once. And, when the machines are on a lease-buy-back deal. Which opens a question about just what machinery is actually owned by Remington, and not merely leased. Which means a potential buyer might need to lease an entire plant's worth of machines (they probably own the tooling, the cutters, jigs, and the IP for same, those are not part of the leased machine). The lease-holders will be among the registered debtors.

Installing those new machines now exposes the physical plant to disrupting currently sealed "hazards." Which gets you back in the expected/unexpected physical plant costs.

I worked on an attempt to add modern capabilities to a shipyard that served through two world wars.
It was a mess.
Just the accumulation of scraped-off anti-fouling paint was enough to make the site toxic.
I can imagine what the various waste chemicals from firearm finishing would do to the soil... .

Had a friend who had worked for a heavy foundry,,, each day his task was to take several 50 gal drums of
Some liquid into a sort of courtyard area surrounded on four sides by the factory buildings. He just dumped it and went back for more. After a typical 4 week summer layoff, he came back and the courtyard had been all paved over. Asked his boss what to do with the liquid,,they just transferred him to a different job. Many years later after most of the foundry had been demoed.....they discovered a nearby creek, actually it was across the road and about half a mile away, just full of the toxic materials. Took millions to clean up..

i would guess they got it cheap because they bought the liability (2 faulty triggers, warranty problem, some debt, possible pension/bonus payouts, and Super fund liability)..... but thats just a guess. Our fabulous single party government finally ran out our aluminum factory, worth probably over $1,000,000,000.00, but I bet you could buy if off Alcoa for $100 if you agreed (and could prove you had the means and intention) of cleaning it up, and dealing with the long term lawsuits.

A friend of mine works at Cape Canaveral and says that there are areas that are Superfund sites. The 1960-1975 time frame was crazy with toxic chemicals being dumped right on the ground during normal operations. They did a soil sample during a remodel and the EPA rep. almost had a heart attack. Ilion is going to be even worse and far more expensive to clean up. I would not want to pay $13 Million on top of the clean up costs for that site.