Is Remington Arms on the Verge of Filing for Bankruptcy?
The signs are all there and now financial experts are questioning whether the Freedom Group which owns Remington Arms, is preparing to file for bankruptcy. The fear comes amid record losses over the last year and high debt carried by the private equity firm Freedom Group, which owns the gunmaker.
A Year of Record Losses
Since President Donald Trump was elected in November of 2016, gun sales have plummeted throughout the industry. Experts say with the election of President Trump, demand for firearms decreased dramatically because 2nd Amendment advocates no longer had the same fear of losing their guns that they would have had under a Hillary Clinton administration. As a result, Remington has put a freeze on hiring and laid off approximately 177 workers. The gunmaker also announced two furloughs since October. Additionally, a management corporate-level shakeup was announced last month, with a handful of executives leaving the company for other opportunities.
A Downgraded Outlook for 2018
America's oldest gunmaker which just recently celebrated its bicentennial, has seen 3rd quarter sales plummet by 41%, according to FOX Business. After a profitable 2016, the first nine months of 2017 didn't have the same results. Remington has lost $60.5 million through the end of September, according to Fox Business.
In a November report of Standard and Poor's Global Ratings, Remington's forecast was described as soft for 2018 and as a result, their corporate credit rating was cut by two full notches from CCC+ to CCC-, which analysts say will make it more difficult for the company to borrow and will force Remington to pay more in interest. According to a report in the Philadelphia Enquirer, this fiscal stress increases greatly the risk of a possible sale, bankruptcy or its inability to meet financial obligations for 2018. While the S&P report stresses that default is not yet "a virtual certainty," the risk of some type of restructure is increasingly likely. In the event that Remington did fail to meet its obligations, S&P estimates "first-lien creditors would receive about 35-cents on every dollar they have lent or invested."
Work Stoppage Announced for 2017-18
On October 24th, Remington announced 11 days that will be furloughed in November and December. Phase two of the 2017 furlough is the week between Christmas and New Years. Employees will be furloughed December 27th, 28 and 29th. They will receive company paid holiday on December 23rd and 24th and then return to work on January 2, 2018. Last month, the company also announced additional furloughs for 2018 including the week between January 22 and January 26. That brings the total number of furloughed days to 16 between November and January for employees. A furlough is defined as a company-wide 'shut-down' ceasing all operations for a period and then allowing employees to return to work upon its conclusion; versus a layoff which would simply eliminate jobs and reduce the workforce.
Local leaders who have long supported Remington as Herkimer County's largest employer are much more hopeful. "Remington's history is here in the Mohawk Valley and we're hopeful we can secure their business far into the future," said New York Assemblyman Marc Butler (R-118). "The climate here in New York has been difficult due to the NY Safe Act and other factors, but we have a superior workforce in Ilion and our background and history with Remington is like nowhere else. We'll do whatever takes in our power to see that Remington remains an integral part of our mohawk valley economy."
A Lesson in Business and Politics
The FOX business report offered up one final observation about the investment firm, the Freedom Group, which owns America's second largest gunmaker and the largest U.S. producer of shotguns and rifles:
Remington may end up another cautionary tale of what happens when private equity buys into a firearms manufacturer as a strategic opportunity without the fortitude to withstand the political winds or changing fortunes of this industry. -Fox Business
Remington Arms was founded in 1816 in Ilion, NY. The gunmaker currently has manufacturing facilities in Kentucky, North Carolina, Ilion, NY and their newest plant in Huntsville, Alabama, and sells guns throughout the nation and to more than 60 foreign countries.
Listen to an interview below with Aaron LaVenture, Remington employees Union President in Ilion, discussing layoffs that were announced in September.
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