Financial Woes For Remington
BY Herschel Smith
7 years ago
Remington Outdoor, the second-largest U.S. gunmaker has suffered a “rapid” and “sharp” deterioration in sales and a similar drop in profits since January, and faces “continued softness in consumer demand for firearms,” credit analysts at Standard & Poor’s Global Ratings said in a report today.
S&P as a result has cut the company’s corporate credit rating — already at a junk-bond-level CCC+ — two full notches, to CCC-, a move likely to make the company’s high-yield debt less attractive to investors and lenders, and force Remington to pay more in interest. The company could face a change in control, bankruptcy, or default on its debt by next year.
A backlog of unsold, unwanted firearms will force Remington to operate at a loss and “pressure the company’s sales and profitability at least through early 2018, resulting in insufficient cash flow for debt service and fixed charges,” unless Remington gives up cash to pay for ongoing operations, S&P adds.
S&P expects “a heightened risk of a restructuring” of Remington’s $575 million senior secured loan and asset-based lending facility, which it is supposed to pay back in 2019.
If Remington defaults on its payments, based on the company’s current value, S&P expects first-lien creditors may receive around 35 cents back from every dollar they have lent or invested. Lower-rated creditors would get back less, or nothing.
Default is not yet “a virtual certainty,” the report added.
And yet I know firearms manufacturers who can’t keep up with the demand. I currently have one on backorder that no one is able to find, anywhere. As they say, if you make things that people want, at a high quality, for a good price, the people will come. If not, they won’t.
On November 19, 2017 at 11:57 pm, Backwoods Engineer said:
The flawed and badly-marketed R51 certainly contributed to this debacle.
On November 20, 2017 at 12:11 am, Angus McThag said:
Remington owns Marlin now.
If you look at Gunbroker and other auction sites people are including “JM Marked” as part of their adds.
A reminder that their gun they are selling isn’t from after the Remington take-over…
On November 20, 2017 at 9:04 am, Ned said:
Along with the mentions above, Remington turned DPMS into crap. Maybe it’s not just the (((soft))) market.