Remington Outdoor Co. Inc. formally filed for voluntary Chapter 11 bankruptcy protection Sunday, completing the maneuver it announced Feb. 13.
Remington, based in Madison, entered protection via U.S. Bankruptcy Court in Delaware and with debtor-in-possession financing secured.
The company did not issue a statement Sunday about the decision.
However, it did post Thursday to its website a fourth and fifth amendment to its restructuring agreement that included bankruptcy details, including financial forecasts for several years post-bankruptcy.
Several media outlets reported Sunday that Remington delayed the filing in part due to the Florida school shooting that occurred Feb. 14 and claimed 17 lives.
Remington said Feb. 13 it “will continue to operate in the normal course and will not be disrupted by the restructuring process.” That includes payments to vendors, employee wages and other benefits and customer support.
Anthony Acitelli, Remington’s chief executive, said Feb. 13 that “the fundamentals of our core business remain strong.”
“We have an outstanding collection of brands and products, the unqualified support of a vibrant community across the industry, and a deep and powerful culture.
“We will emerge from this process with a deleveraged balance sheet and ample liquidity, positioning Remington to compete more aggressively and to seize future growth opportunities,” Acitelli said.
Zagros Madjd-Sadjadi, an economics professor at Winston-Salem State University, said Feb. 13 that “creditors may choose to continue to operate the company or they might try to sell it off piecemeal.”
“Normally, without a prepackaged deal to sell it to another company, these types of endeavors last between six and 12 months before the company emerges from bankruptcy, is sold in total to pay off creditors, or has its assets liquidated.
“The Remington name still has some value as a brand, but whether that can keep the company intact remains to be seen.”
Remington submitted a restructuring plan designed to reduce much of its $950 million debt and provide $145 million in new capital.
The company has been overshadowed by lawsuits filed following the 2012 Newtown, Conn., school shooting tragedy in which 20 first-graders and six educators were killed. The assailant used a Remington-made rifle.
A lawsuit filed by family members of the Newtown tragedy victims says Remington should not have sold such a dangerous weapon to the public. Remington’s lawyers have disputed the allegations. At that time, Remington was known as Freedom Group.
However, Remington, which is controlled by buyout firm Cerberus Capital Management LP, was abandoned by some of Cerberus’ private equity fund investors at that time.
CNN reported Sunday that attorneys for the Newtown family members said they do not believe the bankruptcy would affect their legal case.
According to a Feb. 13 news release, creditors, identified as term loan lenders, would own 82.5 percent of the equity in a reorganized Remington by providing a $100 million, four-year loan. Another group of creditors would hold the other 17.5 percent through providing a $45 million bridge loan.
The company listed having $13.7 million in cash as of Sunday.
The company has secured a $193 million revolving senior debtor-in-possession loan that will convert into a three-year asset-based debt loan upon exiting bankruptcy.
Besides using the bridge loan, it expects to need $73.1 million in operating cash before exiting bankruptcy protection, as well as paying $22.2 million in restructuring costs and fees. That would leave it with $18.4 million in cash post-bankruptcy.
Remington projects fiscal 2018 sales of $653 million and gross profit of $121 million. The sales estimates climb to $732.2 million in 2019, $795.8 million in 2020, $825.6 million in 2021 and $855 million in 2022.
It also projects ending with cash on hand of $35.2 million in 2018, $26.1 million in 2019, $61.1 million in 2020, $107.9 million in 2021 and $165.3 million in 2022.
Remington’s post-bankruptcy board of directors would have seven members, of which the chief executive would be included, but not allowed to serve as chair. Four members, including the chair, would be appointed by the creditors which own 82.5 percent of the company, while two members would be appointed by the creditors owning the 17.5 percent stake.
Tony Plath, a finance professor at UNC Charlotte, said he believes the creditors may keep Remington past its exit from bankruptcy protection because of the slumping gun manufacturing industry.
"Creditors will make a decision to either sell the company into another, stronger gun manufacturer in the short run," Plath said.
"Or restructure the firm's operations, return it to going-concern status as a profitable, albeit weak, company in the short run, and then return it to shareholder ownership via an initial public offering of the restructured company's new shares a few years down the road."
Like most firearms manufacturers, Remington has struggled recently with declining sales amid decreasing consumer demand following the election of President Donald Trump in November 2016.
It is not clear how many employees Remington has in the Triad. At last count, it had 150 in Madison, down from 260 in 2016, and 2,700 companywide.
Remington’s fiscal 2017 sales were down 27.5 percent to $466.7 million through the third quarter. It had a $60.5 million loss as of Oct. 1, compared with net income of $19.1 million a year ago.
Remington has taken to date a $33.2 million impairment charge for fiscal 2017, compared with $2.3 million a year ago.
Before Trump’s presidential victory in November 2016, pro-gun advocates had expressed concern that Democratic challenger Hillary Clinton would continue former President Barack Obama’s push to close “loopholes” on gun purchases and background checks through Congress and possibly through future appointments to the U.S. Supreme Court.
Investment expert Louis Navellier, chairman of Navellier Associates, has said Obama “is the best gun salesman on the planet.”
Since Trump’s win, the sales and share prices of firearms manufacturers, including Sturm, Ruger & Co. and American Outdoors Brands Co., have slumped.
In December 2016, at the end of the second term of the Obama administration, Ruger reached a peak of 2,430 full- and part-time jobs — more than double its 2008 total of 1,145.
On Feb. 24, Ruger disclosed it had eliminated 28 percent of that workforce, or 680 jobs, including at least 70 at its production plant in Mayodan. The breakdown: 368 full- and 312 part-time jobs. The workforce is at its lowest level since 1,441 at the end of 2012.
The National Instant Criminal Background Check System, conducted by the Federal Bureau of Investigation, said the number of firearm background checks declined in 2017 for the first time since 2002. That included the checks declining in 10 of 12 months, and by an 8.4 percent decline overall to 25.2 million.