Remington $1B in debt

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Remington $1B in debt

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Not sure how this will effect the future of Marlin.

http://nypost.com/2014/12/23/gunmaker-s ... les-slump/

Gunmaker staring down $1B in debt as gun sales slump

By Josh Kosman December 23, 2014 | 11:26pm

Gunmaker staring down $1B in debt as gun sales slump


Cerberus Capital Management’s bet on America’s biggest gunmaker has backfired.
After rolling up several famous firearm makers and rebranding them as Remington Outdoor Co., Cerberus will have trouble unloading its gun holdings, sources said.
Remington, which produced the Bushmaster rifle used in the Newtown shooting, is struggling with more than $1 billion of debt as sales slump. Consumers who initially rushed to purchase a gun in late 2012 out of fear about stricter laws have pulled back on purchases.

“People who intended to buy a gun in three years bought one then,” said Dougherty & Co. senior research analyst Andrea James.
Remington is also facing an expensive recall that could cost more than $25 million, said a source. This month the company said it would replace millions of triggers after reports that guns would fire without being triggered.

More troubling, nine parents of children killed at Sandy Hook Elementary School sued the gun maker last week over the rifle wielded by Adam Lanza.
The situation “spells disaster” for Remington, said a source familiar with the company’s financials.
Remington has seen its earnings before interest, taxes, depreciation and amortization fall from $240 million last year to $125 million this year, the source said. Revenue has fallen from $1.25 billion last year to $1 billion in 2014.

In October, Moody’s Investors Service downgraded Remington’s debt to B2, or high credit risk.
“Remington’s weakened financial condition heightens ongoing rating concerns, including high regulatory and product liability risks and the discretionary nature of its products,” Moody’s wrote.

Cerberus said Remington has cash and that the business overall remained strong.
In late 2012, Cerberus tried unsuccessfully to sell Remington, formerly known as the Freedom Group, for $1.3 billion, a source said. A group of well-off Midwestern families expressed interest at a lower price of between $800 million and $900 million.

Remington passed and ended up borrowing more money to pay investors a dividend, raising its debt load to more than $1 billion.
Potential buyers will just wait for the company to sink further into trouble and try to pick up the pieces on the cheap, a source predicted. That’s especially true now that the demand for long guns, like the ones Remington makes, has faded.

“A sporting rifle is nice to have, unlike a handgun, which is perceived as a necessity,” James said.
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