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Remington to file for Chapter 11 (reorganization) Bankruptcy

Discussion in 'General Gun Discussions' started by Solomonson, Feb 12, 2018.

  1. Solomonson

    Solomonson Member

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    You don't know that. There are issues other than legal issues at stake. If Remington does burn warranty/repair customers, that would be yet another shot to the head of the company. IF Remington receives strong leadership, such customers will be WELL taken care of. The courts are not going to micromanage this.

    I suspect there are a number of distributors that would VERY MUCH like to have their sales contracts evaporate with a number of gun makers -- probably ALL of them. There's no shortage of product. Remington will not be prevented from booking new orders under C11.

    Your former vendor that couldn't ship on time was not due to C11.
     
  2. Solomonson

    Solomonson Member

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    You don't know that...

    Anyone with knowledge of what Ronald Coburn accomplished at Savage Arms would not make such a comment.
     
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  3. Solomonson

    Solomonson Member

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    This wasn't the case with Remington and the number of other companies (Marlin, Bushmaster, Dakota Arms, etc.) that Cerebus bought and ultimately put under the Remington umbrella. Only H&R was on its ass financially when Cerebus purchased them.

    Cerebus bought Remington (a very solid company) from DuPont for a good price and their timing was excellent. Then they tried to build the General Motors of firearms and ammo by buying up a lot of "going concern" companies. Their moves were ham-fisted and they saddled the companies with far too much debt to play for things like a GIANT manufacturing operation in Huntsville, AL.

    In the process they also brought out some horrid Remington handguns and the highly questionable Model 700 "problem" surfaced. Both did great damage to their companies' reputations.

    Had this whole process been handled by more competent management, I'm certain that Remington, et. al. would still be world class.
     
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  4. Solomonson

    Solomonson Member

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    It really doesn't matter how well Colt does from an operating standpoint, as long as it's saddled with such crushing debt to service.

    Sadly at some point, Colt's name, it's trademarks, etc. will go to auction. Someone will buy them at a price FAR less than the debt owed by Colt. THEN "Colt" will become profitable.
     
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  5. Solomonson

    Solomonson Member

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    Cerebus bought Remington in 2007...

    There's other reasons why conglomerates sell gun companies. First, firearms isn't a PC business to be in, and it hasn't been for a number of years and stockholders voice their opinions on stuff like that. Second, Remington's sales were little more than a rounding error to DuPont. I also doubt that Remington met DuPont's corporate ROI requirements -- particularly since DuPont was long adverse to letting Remington get into the production of handguns.

    Colt's main issue is its crippling debt it has to service. Unless it can shed a lot of that burden through something like a bankruptcy auction, or unless someone with very deep pockets and a very long-term view (like Beretta or possibly FNH) buys them, the Colt circus will remain difficult to watch.
     
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  6. Sovblocgunfan

    Sovblocgunfan Member

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    I don't think you understand. I do know that, and have seen it happen more than once. Chapter 11 is only about money, and how much is owed to whom and when it is due. There is no consideration given to anyone who is not part of the filing process. The "other issues at stake" are only in the eye of public perception. It does not take into account anything about previous quality issues, warranty work, poor prior management, employee of the month parking spots, or how many options are in the caff for lunch. The creditors don't give a crap about all of those terrible R51's Remington has in its RMA area, and don't care one bit about the public who are gonna be upset that Remington isn't going to offer a 20 gauge V3 this year. The articles all say that Remington managed to obtain a whole bunch of debt forgiveness, and Remington has debtor-in-possession financing that is allowing them to keep their doors open through restructuring. That doesn't mean their debt is wiped clean, however. That means creditors have significant liens against Remington Outdoor holdings and get to be first in line to be paid back, in terms that favor them. The court will control this so it isn't a stampede, but make no mistake about it--they will regulate in favor of those who can show those significant liens. Pre-existing warranty work on your firearm doesn't count-they'll get around to that when and if the creditors think it's appropriate to do so. While Remington remains open to do new business (I never suggested otherwise) and try to remain solvent post-filing, the proceeds of whatever progress is made in terms of new business is shelled out immediately to the creditors who hold the liens. Any pre-filing business will still need to be carried out (that is always a requirement), but it is now going to be seen as a liability to be managed. After all, those creditors originally bought in to the Remington mess to make money. Simply being made whole will now be a poor consolation prize. Even now, credit rating bureaus are beginning to downgrade their ratings of Remington and they are stating that the risk of defaulting is inching higher. So this may be a losing battle anyway. I hope not, but it's gonna be a painful road to recovery. Yes, I know Savage (and even Ford, if I recall correctly) came out of their situation and returned to profitability, but every situation is different, and I can only hope big green can pull off a similar success.

    People complained mightily when Cerberus bought Remington, automatically assuming that would be a soul-sucking experience that would reduce Remington to something significantly less meaningful than it had been for the previous 200 years. Why on earth do you think this would be any different? Of the several options available, C11 is arguably the least impactful way to "go bankrupt". But no company ever wants to be in that position unless there is no other alternative. When was the last time you saw a press release where the corporation said, "GOOD NEWS! WE'RE BANKRUPT!!"?

    My vendor generally shipped on time until they began filing proceedings. Then things slowed down to a crawl. Now they won't return phone calls/emails and refuse to respond to demands for performance. After all, they have bigger fish to fry than little 'ol me. Yes. They stopped shipping to me because they filed. Make no mistake about it.
     
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  7. Sovblocgunfan

    Sovblocgunfan Member

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    Here. Maybe this will help clear things up. Remington and certain creditors have entered into a forebearance, and also made provisions for loans to pay the creditors back for helping remington. Please note, the buying public is not a part of this agreement.

    https://www.remingtonoutdoorcompany.com/sites/default/files/ComprehensiveFinancialRestructuring.pdf

    It looks like remington is trying to make the best out of a pretty bad situation. I hope they come out stronger for it, but nothing in life comes without a cost. Whether they can pay these new loans off or not will determine the fate of the company.
     
    Last edited: Feb 13, 2018
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  8. HOWARD J

    HOWARD J Member

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    I was never happy with Remington when I found that they knew that their rifles would fire without pulling the trigger & they would not fix it. I got rid of my 700 when it got stupid.
    Never did buy another one.
     
  9. CoalTrain49

    CoalTrain49 Member

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    Remington was not a solid company when it was sold to Cerberus in 2007. When a company's debt is more than twice their assets that's not exactly a solid company.

    The price of the company was 370 million. It was 252 million in debt.

    Solid company's don't get sold to venture capitalists unless they need some debt relief.

    Remington is basically changing ownership again when they file C11.

    https://www.reuters.com/article/us-...reditors-to-file-for-bankruptcy-idUSKBN1FW23Q

    Cerberus took what they could out of the company and left them 950 million in debt. That's what venture capitalist do. They run companies into the ground. The managers/investors exit with millions in their pockets and leave the company with nothing but debt. Looks like Cerberus was successful.

    Remington is no longer a viable firearms manufacturer. Their current products are a testimony to that.
     
    Last edited: Feb 13, 2018
  10. Water-Man

    Water-Man Member

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    And you do? Let's see your crystal ball.
    Remington's reputation, as well as the holding company that acquired them, has burned a lot of people. Far more than Savage. I've been shooting Remington firearms since 1951, so I know a little bit about them.
     
  11. hdwhit
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    hdwhit Member

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    "Ham-fisted" is a description that is almost kind. Graduate school case studies have been built on far less egregious cases of mis-management.

    Also, the debt Remington was saddled with was siphoned off to pay for a whole lot more that just the Alabama manufacturing facility.

    Amen.

    But then, my assessment of the consolidation of the firearms industry from about 1980 onwards has been one marked by criminally inept management in the name of short-term returns at the expense of the long-term viability of the companies.
     
  12. hdwhit
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    hdwhit Member

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    First, any competent management team does not make business plans that rely on panic buying to continue indefinitely; they at least make plans for what happens if the unexpected happens (like Trump winning). The fact Remington had not spent much of 2015 and all of 2016 preparing to implement a retrenchment plan in case of a Trump victory tells you the current management team is incapable of making anything - must less "the best" - out of the mess they plunged this company into.

    Second, Remington was acquired by corporate raiders who had no interest in developing the next generation of firearms, but were instead interested in "monetizing" the assets, name and reputation of the company and taking that money to be invested in non-firearms pursuits.

    Make no mistake about it, Remington will emerge from bankruptcy. But it will not emerge from bankruptcy with adequate capital to invest in the new products and processes needed to remain competitive. Remington will stagger on like an animated cadaver making and selling its existing product line until even it becomes too outmoded to attract enough buyers to keep the doors open.

    Want to see Remington's future; just look at the "dead man walking" that is Colt.
     
  13. MachIVshooter

    MachIVshooter Member

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    I think big green will fare better. Colt rested on it's laurels for too long in the civilian market, counting on military and government contracts.

    ROC is huge: Bushmaster, DPMS, Marlin, H&R, Parker Gun, Tapco, AAC, Dakota Arms, Nesika, Stormlake, Timbersmith and Barnes Bullets.

    Perhaps, but Remington has been rolling out more new products the last few years than they had in a long time. Some are troubled, some are quite good. The new RP45 is an awesome pistol, and they're bringing out a chassis rifle like the Ruger Precision rifle, but at a lower entry pricepoint, and able to enjoy the vastly better aftermarket support the 700 has had over other bolt guns. They've also been offering more suppressor ready bolt rifles than most other manufacturers, which is definitely a smart move fight now.

    Furthermore, as long as the 700 and 870 maintain their performance, those will never lose popularity, so aside from variants/facelifts, the company doesn't really need to change it's product line drastically. I'm glad they finally got back into the handgun game, the R1 in particular is a fantastic pistol, but they made it nearly a century without producing handguns (XP100 don't count).
     
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  14. Sovblocgunfan

    Sovblocgunfan Member

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    Hdwhit, I don’t disagree with you. The bad situation i was referring to was getting into bed with Cerberus in the first place. Cerberus gave ROC a means to operate for awhile longer, but that was never a long-term goal for Cerberus. The plan was to pull as much money as possible from ROC then get out. Unfortunately, the cost to ROC for that cash was a huge amount of debt that they’ve “eliminated” by making more loans. It does not appear the deal is as rosy as the news stories would have you believe.

    I think ROC has a pretty decent product lineup-a few turds and bloated option lines not withstanding (How many flavors of 700 does the factory really need to offer?). And I think there is enough market appeal to keep the doors open for awhile longer. But I do think C11 will only ultimately be a play for time and ROC will succumb to its debt loading and won’t be able to pay off its creditors-they’ve climbed into another different box that they may not be able to get out of. C11 may be a good thing for awhile, but I fear ROC will end up C7.
     
  15. mshootnit

    mshootnit Member

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    It will just be a name that various entity buy the rights to use over time, while factories utilized will shift overseas.
     
  16. fjblair

    fjblair Member

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    The root of the problem. They saddled Remington with almost a billion dollars of debt. A billion dollars.
     
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  17. george burns

    george burns Member

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    It's a shame to see any American institution close. Honestly I bought 2 1911's of the R1 Variety this past year. And they make a good reliable 1911. I did sell one off for a nice profit, and I will be looking for more flash sales now.
     
  18. hdwhit
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    hdwhit Member

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    That's the way any corporate raider (er, venture capital firm) works. Cerberus, Blackstone, Bain, etc., the approach with little variation is always the same. Find an undervalued company with marketable (er, unencumbered) assets, swoop in, buy enough shares to get control, load the company up with debt that is then funneled out to the corporate raider and then leave behind an empty husk.
     
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  19. hdwhit
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    hdwhit Member

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    The issue is not whether Remington might have recently released a good product or two. Nor is it whether Remington might be set to launch another one shortly. The capital expenditures for those products were made years ago.

    Remington's size is irrelevant because their debt is even bigger. And since most of it is secured by corporate assets (that's part of what the document concerning financing posted with Sovbockgunfan was talking about) Remington cannot discharge the debt without the lender taking the assets it needs to operate so it will remain a debt-laden company.

    The RP45 is not going to pay back a billion dollars in debt. And, as you noted, their precision rifle is only now making it to market after Ruger and others have already staked out commanding positions in that market segment such that Remington is having to enter at the value (i.e. low margin) end of the segment. That makes their few 2017 and 2018 product releases irrelevant.

    What is relevant are the 2022 to 2025 product releases that will never even happen because 1) the firm didn't have the capital to even start developing them and 2) management was too distracted by the bankruptcy to properly oversee their development and release.
     
  20. Solomonson

    Solomonson Member

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    Buying Remington from Clayton, Dubilier & Rice $118M in cash + assuming $252M in debt was a good deal in 2007. Cerebus' timing was superb! If Cerebus had managed Remington correctly and built a full line of quality handguns (or better yet, did it under the Colt name for the right price) and fully filled out its long gun offerings [quality/inexpensive .22LR rifle (they finally did get this right), an AR-15, etc.], it would have been a world-killer. Remington, Colt & Co. would have been awesome. Instead it tried to build the firearms equivalent of General Motors.

    Solid companies often get sold to venture capitalists -- because they are willing to pay the most for them
     
  21. Solomonson

    Solomonson Member

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    Owning Remington firearms in this context means absolutely nothing...

    Cerberus bought Remington at the right time (2007), for a good price. Had it adroitly filled-out Remington's line-up -- including handguns, it would still be by far the largest small arms maker in the world. Unfortunately Cerberus tried to build the General Motors of firearms by purchasing several companies and it failed.

    Savage was dead when Coburn got involved with them.
     
  22. CoalTrain49

    CoalTrain49 Member

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    Maybe sometime in the future you can head up your own hedge fund. Good luck and bye for now.
     
  23. Solomonson

    Solomonson Member

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    Sadly, that's what it boils down to at this point. Ultimately it's what has also long crippled Colt.

    Other than its name and some names it acquired, I wonder what Remington really has to secure the debt? Its pink elephant plant in Huntsville? Its clean-up liability of a plant in Ilion? I suspect the ammo-making arm of Remington is worth quite a bit, but still...
     
  24. Solomonson

    Solomonson Member

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    Maybe someday you'll stop making rude comments? "Good luck and bye for now."
     
    Last edited: Feb 15, 2018 at 1:52 PM
  25. Solomonson

    Solomonson Member

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    That's patently ridiculous... Remington was purchased and was then followed by many more gun-related purchases by Cerberus. Cerberus didn't try to break-up Remington to sell-off its pieces. You are just wrong.
     

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