Warm Southern Breeze

"… there is no such thing as nothing."

Remington Files Bankruptcy

Posted by Warm Southern Breeze on Monday, March 26, 2018

Remington Outdoor Company, formerly known as Remington Arms Company, LLC, is America’s oldest firearms manufacturer, and privately-owned by Cerberus Capital Management, announced February 12, 2018, that they intended to file Chapter 11 bankruptcy protection later this year. Cerberus will relinquish ownership once restructuring is completed. Their filing was done today, March 26, 2018.

Remington’s plan will allow them to reduce debt by $700 million of their $950 million debt, contribute $145 million of new capital into their subsidiaries, and $100 million in creditor-funded money as a debtor-in-possession term loan. Planning for the bankruptcy had been announced late 2017.

The company’s unaudited returns dated February 12, 2018, show net revenue of $603.4 million, down from $865.1 million 2017. Remington also said their 2017 gross profit percentage was 20.9%, down from 27.4% in 2016.
(see: https://www.remingtonoutdoorcompany.com/sites/default/files/ComprehensiveFinancialRestructuring.pdf)

Earlier, the company settled a Class Action lawsuit claiming they had manufactured faulty firearms dating back to 2006, and had known about the faults, but did nothing. The lawsuit’s name is Pollard v. Remington Arms Co., LLC, et al., Case No. 4:13-cv-00086-ODS (W.D. Mo.).
(see: http://remingtonfirearmsclassactionsettlement.com/)

They were also sued by families of the deceased Sandy Hook Elementary School shooting December 14, 2012, in Newtown, Connecticut, in which 20-year-old Adam Lanza used the Remington Bushmaster AR-15 to kill 20 children and 6 adults. Earlier cases had been dismissed based upon Remington’s position that gunmakers are immune to lawsuit because of a provision in the federal Lawful Commerce in Arms Act, which was signed by President George W. Bush in 2005, and largely prohibited lawsuits against gun manufacturers and distributors whose firearms are used in a criminal act.

The families’ appeal to the Connecticut Supreme Court in mid-November 2017 was based upon an exemption to the act through a claim of “negligent entrustment,” and they argued that Remington knowingly marketed and sold the AR-15 to a particularly vulnerable group of young men, and that the sale of that gun to civilians is negligent because it is primarily “designed for our armed forces and engineered to deliver maximum carnage.”

In mid-February 2014, Remington had announced a planned move to a manufacturing facility in Huntsville, Alabama, with the prospects of creating 2000 jobs.

According to a February 27, 2014 story by Steve Doyle published on AL.com, the Huntsville City Council approved a development agreement at their regular Thursday night meeting which guarantees Remington $14.5 million in local incentives – including free use of the sprawling former Chrysler electronics plant near the airport.

However, Remington would have to repay the city if they failed to fulfil their employment promises.

Remington promised that by the end of 2015, there would be at least 280 full-time employees at their Huntsville gun factory, who would earn a minimum average hourly wage of $19.50, which is $40,560/year.

From that point, Remington planned to rapidly increase hiring according to the following terms:

680 employees by the end of 2016;

1,018 employees by 2017;

1,258 employees by 2018;

1,498 employees by 2019;

1,698 employees by 2020; and

1,868 employees by 2021.

Remington also promised to increase the minimum average salary from $19.50 to $20.19 an hour, or $41,995/year – in 2017.

Remington said they would spend at least $110 million to renovate and equip the Huntsville factor, and the development agreement would give Remington the option of transferring up to $20 million worth of equipment and “other capital assets” to Huntsville from other states, such as from Remington firearms facilities in upstate New York and Kentucky.

As preparation, Huntsville’s Industrial Development Board bought the former Chrysler plant for $10.5 million, using a bank loan guaranteed by Remington, and promised title to the building and its 145-acre grounds off Wall-Triana Highway would be transferred to the company in about a month.

The development agreement said Remington would rent the facility from the City of Huntsville for $1.25 million per year, but the annual mortgage payment would be waived each year the company met its employment and salary targets.

A January 2016 report from the Chamber of Commerce of Huntsville/Madison County with employment figures were certified by Mercer & Associates was requested by the Huntsville Industrial Development Board, and showed there were 324 Remington employees as of August 31, 2015 who were earning wages nearly $10/hour higher than initially agreed upon by the City of Huntsville, the State of Alabama, and Remington. The terms of the agreement stipulated at least 280 full-time jobs by the close of the 2nd year of the project ending February 28, 2016 at the 100 Electronics Boulevard facility in Huntsville.

The Huntsville facility makes the Bushmaster AR-15 and DPMS, handguns (R1 1911 Pistol, RM380 Micro Pistol – the first new Huntsville design, AAC silencers and H&R shotguns.

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