The Latest Chapter in the Remington Saga: Chapter 11
There is a lot of interest and banter associated with Remington's announcement to reorganize under Chapter 11 bankruptcy laws. The name “Remington” is often used as if it is a family-owned company. That's hardly the case.
On March 7, 1888, ownership of E. Remington & Sons was sold by the Remington family to new owners, Marcellus Hartley and Partners. This consisted of Hartley and Graham of New York, New York, a major sporting goods chain who also owned the Union Metallic Cartridge Company in Bridgeport and the Winchester Repeating Arms Company of New Haven, both in Connecticut. Yes, it was a chain of sporting goods stores that owned Winchester and Remington in the late 1800s. The fantasies about Oliver Winchester and Eliphalet Remington running much of anything in a modern sense is just that, fantasies. Eliphalet Remington passed in 1861. Oliver Winchester died in December 1880; his son and successor, William Wirt Winchester, died of tuberculosis four months later.
There is more to the story than that, of course, for Remington was eventually acquired by DuPont and Winchester by Olin. In 2007, Remington Arms Co. Inc. agreed to be acquired by private equity firm Cerberus Capital Management LP for $370 million. The purchase priced includes $118 million in cash as well as the assumption of $252 million of debt, including a revolving credit line and subordinated notes.
Also in 2007, “Remington bought Marlin.” The deal closed in January, 2008. Well, not exactly, for Remington was just freshly acquired itself and hardly in a position to buy other companies. Cerberus bought Marlin.
Earlier, Cerberus bought Bushmaster, in 2006. None of this was a particularly massive move by Cerberus, who bought Chrysler in 2007 as well as Remington. “Freedom Group” was a construct of Cerberus, not of Remington. Whether Bushmaster, Marlin, or Remington were wise acquisitions by Cerberus in the first place history will judge.
The sagging AR-15 market is something that Cerberus exposed itself to, not Remington, for the Bushmaster acquisition came first. Marlin reportedly was a sucked orange, a company with worn-out tooling that, stunningly, had no production blueprints for much of its products. The current debt that Remington Outdoors is restructuring is hardly all due to Remington. The company known today as Remington was cobbled together by Cerberus, starting with Bushmaster.
The Bushmaster component has had its problems, for it was a stolen Bushmaster used in the Beltway Sniper attacks in October, 2002. Associate legal fees (and a $500,000 payout) helped set the stage for Bushmaster's sale later on to Cerberus.
With the Sandy Hook massacre in 2012, it was a stolen Bushmaster again. A deranged 20 year old pumped 4 shots from a Savage .22 rimfire into the head of his mother, killing her to get control of her legally owned Bushmaster and her legally owned car. No one seems to care about the stolen car, without which the tragedy could not have happened.
What Cerberus constructed could not be sustained with litigation and the downturn in the gun market. With the Chapter 11 restructuring, Cerberus is out of the picture, losing any and all ownership of Remington and the “Freedom Group” set of companies. Cerberus adventure into the firearms industry leaves them with goose eggs.
Along the way, Cerberus had help, though. Help from the State of New York, which passed the not-so “S.A.F.E ACT” in 2013. It is an attack on the Constitution and an attack on the firearms industry. It has had no significant effect on crime, either way. It does make it difficult for gun companies to operate in New York. Weatherby decided to flee California for Wyoming. Why would any business entity want to pay taxes to a government entity that seeks to destroy them? Some politicians still seek to convert rights into “privileges” and have no problem taxing rights. It is a pity that there is no tax on government officials and agencies using extraneous words paid for by American taxpayers.
The end result of all this is the turning of an artificially created, unsustainable business model into a sustainable one. That is a good thing for Remington, a very good thing indeed.
Copyright 2018 by Randy Wakeman. All Rights Reserved.