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Gunmaker Remington faces default as Americans buy fewer firearms

Philly.com – by Joseph N. DiStefano

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 Friday.

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.


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10 Responses to Gunmaker Remington faces default as Americans buy fewer firearms

  1. JohnS says:

    From what I’ve read they have had their share of quality issues lately. I’m sure this has impacted their sales to drive customers to other manufacturers.

  2. mary in ND says:

    wasn’t there a boycott of Remington after the SAFE ACT was passed

  3. Jolly Roger says:

    Philly.com is trying to suggest that Americans are no longer buying guns, simply because no one is buying Remingtons.

    Remington has a lot of new competition, has pissed off a lot of their customers, and probably took on a lot of debt to meet recent demand, only to see the new demand bypass them.

    Their specialty is deer hunting rifles, and I think most Americans are looking for something more “combat orientated” these days.

    • Bill in IL says:

      Agreed Jolly. The trigger issue on the 700 bolt action rifles they refused address is haunting them. Not to mention the fiasco they made of Marlin.

  4. Ed Teach says:

    They had their chance and they wasted it. When was the last time they had a good product? Imo at least 20 years ago.
    If they want to save themselves, perhaps they should get into the airbow market.
    Freedom group, their parent company destroys every brand they own. Look at marlin back 30 years ago. can’t remember the last new marlin i saw. Look at bushmaster and dpms, junk. Many times over priced junk.

  5. Enemy of the State says:

    I own plenty of freedom tools, but not 1 Remington made after 1900’s
    only Remingtons I own are 1858 cap and ball black powder pistols

  6. Mark Schumacher in LV says:

    Remington? What’s a Remington?

    • Martist says:

      I hear they make crappy electric shavers…?

      Oh, and sniper rifles for brain dead cannon fodder.

      • Mark Schumacher in LV says:

        They have a Fkd up name, time to do what they did in Kansas, close the goddamn doors and get it over with. They can’t even sell this garbage through a Disneyland souviener shop.

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