Home Forums Hunting & Shooting Hunter's Campfire Jim Shephard on Remington

Yesterday’s bankruptcy court hearing for Remington Outdoor Company was expected to be nothing much more than a formality. With seven purchasers for the 200 year old company’s remaining assets identified, there wasn’t much remaining for the telephonic hearing to do other than move the proceeding one step closer to bringing in the $151 million dollars that would then be applied to the company’s significantly larger debt.

With the buyers ready to move to the next phase of a bankruptcy purchase, U.S. Bankruptcy Judge Clifton R. Jessup, Jr. had made it very clear some several weeks ago that he wasn’t favorably disposed to holding off on the matter any longer.

That, however, didn’t deter one group. A last-minute Motion to Continue Sale Hearing was filed yesterday on behalf of VUONG Holdings, LLC. In that motion, VUONG had asked for a nineteen day delay in the proceedings while it prepared a qualified bid for the company that would be “anticipated” to be larger than the $151 million to be realized through the breakup bids for the company. VUONG, according to their filing, had also presented a plan that would continue the operations of the company.

Judge Jessup, based on “the arguments of counsel, and based upon the Court’s ruling as stated on the record,” denied that motion.

As the proceedings continue, you can expect more news as to the plans the seven purchasers have for their purchases.

In the meantime, a note from a former Remington senior executive and friend who “took exception” with a portion of yesterday’s feature on the bankruptcy and managerial missteps along the way to Remington’s demise.

While he readily acknowledge that senior managers bear responsibility for many of the decisions, he reminded me that those decisions are “frequently” driven by the “owners who ultimately hold and drive the purse strings.”

A well-made point. While it’s easy to blame the upper level management for Remington’s missteps, that glosses over the point that Remington’s owners haven’t exactly behaved as good stewards of the various brands.

In Remington’s bankruptcy number one, I was reminded, the seminal problem wasn’t that Remington wasn’t a relatively successful business, it was that the owner, Cerberus Capital, burdened the company with a terrific debt load, then used the money elsewhere. That’s true, and despite the fact that Cerberus’ Steve Feinberg and his team said they were ardent Second Amendment supporters, they took their dollars elsewhere, leaving Remington holding a very big bag.

In the latest bankruptcy, the ownership of the company, putting it mildly, were “reluctant” about their property. Franklin Templeton and JP Morgan were, at best, lukewarm about the industry. In fact, they showed no interest in the future and didn’t do much to maximize any potential.

So where is this going? Not far, and not for much longer. As was stated to me, when management and ownership don’t mesh, everyone has to make choices. Managers have to choose to do the best they can, for as long as they can, with whatever tools (funds) they have, or leave. Owners are faced with the choice to either give their asset the chance to succeed, or choose to strip the carcass and move on. That’s not meant to be overly harsh, but intentionally denying a company the opportunity to succeed is, ultimately, a choice. The alternative is to sell, close or declare bankruptcy.

Bankruptcy, in fact, is designed to give second chances. For the brands that were acquired during Remington’s gobble-up phase, this latest change in ownership may ultimately bring the opportunity they needed for them to succeed. Not every small company can thrive as part of an over-arching organization. Success has levels of magnitude.

As was pointed out to me yesterday, “sound ownership provides management the chance to be successful- our industry shows that time and again.”

Some companies prove that time and again. Ruger, Smith & Wesson, Beretta, Glock, SIG, Weatherby, Hornady and Mossberg are prime examples of passionate ownership and leadership working together. Yes, they’re about making money, but they’re also joint stewards of their brand.

Ultimately, their success proves something that many smart people from other industries can’t seem to grasp: ours is still very much a hands-on world.

It’s still an industry where deals can still be struck -and honored- based on a handshake. Although it’s still best to reduce those handshakes to writing.

We’ll keep you posted.

Do you have a link to information about the seven purchasers?
JJE is the only one I have read about.

Thanks tom for the insight and up to date info. Steven Feinburg yup it was the joos again assaulting the 2nd. MB

You mean Remington could have gone broke for the reasons above??

Sure it wasn't because they chose the wrong barrel twist rate a couple times ?


But in all seriousness, thank you for the info.

UPDATED Remington News-
Beginning at 9 a.m. this morning, final approvals is expected to be granted by federal bankruptcy Judge Clifton R. Jessup, Jr. for auction bids submitted for the various parts of the conglomerate formerly known as Remington. The approximately $155 million in funds realized from the auctions will be applied to the company’s debts.
And with that, the final chapter of Remington, at least as a major player in the firearms industry, finally has been written. How it will all shake out remains to be seen, but there are a few things we do know:
-The 500,000 square feet of Alabama manufacturing facility that was to house Remington’s projected 2,000 jobs will be looking for a new tenant. The jobs disappeared, along with much of the state’s $110 million capital investment.
-Everything associated with Remington, Marlin, AAC, H&R, Barnes Bullets, DPMS, Bushmaster, Tapco, including trademarks, intellectual property, and manufacturing equipment, will be disbursed across the firearms industry.
-Outdoor retailer Sportsman’s Warehouse is the high bidder for Tapco’s gun parts and accessory business.
-Franklin Armory will get Bushmaster.
-Roundhill Group, LLC, has offered $13 million for the non-Marlin firearms -including the shotgun manufacturing in Ilion, NY and handgun manufacturing in Lenoir City, TN.
-JJE Capital Holdings, LLC, has been designated the successful bidder for the DPMS, H&R, Stormlake, AAC and Parker brands.
-The biggest bidder is Vista Outdoors.
Yesterday, Vista announced it had agreed to a purchase price of $81.4 million to add the familiar Remington green trademark to its portfolio of brands, along with the Lonoke, Arkansas, ammunition manufacturing facility. As with each of the bids, Vista’s is subject to closing adjustments.
Vista CEO Chris Metz says the addition doesn’t just mean the addition of the iconic Remington brand. The acquisition, he said in a statement, will also “protect hundreds of jobs, support wildlife and habitat conservation and ensure that hunting and shooting sports enthusiasts can continue to purchase their favorite ammunition and accessories.” In 2019, those enthusiasts purchased approximately $200 million worth of those “favorite” items. Vista says it expects to add those earnings-excluding transaction and transition costs- to their annual revenue reports beginning in 2022.
For some of the various brands that fell into Remington’s portfolio, then essentially disappeared, the breakup might mean a second chance.
Today, for example, we’ll learn if Marlin becomes a part of Sturm, Ruger. As a standalone venture, Marlin might be successful. With Ruger’s not-inconsiderable financial strength and proven manufacturing expertise, Marlin could be positioned to take advantage of renewed interest in- and demand for- their modernized takes on the lever action rifle.
One of the steadily performing assets in the Remington portfolio has been Barnes Bullets. The company reported $21.8 million in sales for the year ending June 30, 2020. Barnes, barring something unexpected, will become part of Clarus Corporation (NASDAQ: CLAR) subsidiary Sierra Bullets. Their $30.5 million all-cash offer will bring Sierra a much larger portion of the lead-free ammunition business. And it eliminates a competitor.
“Barnes embodies the ‘innovate and accelerate’ playbook we seek with ‘super-fan’ brands,” said John Walbrecht, Clarus’ president. “Barnes is a leader in lead-free, all copper bullets, with a rich history of product innovation and strong brand awareness amongst the core enthusiast, yet it has untapped go-to-market potential.”
“We believe these ingredients give us a heightened advantage to develop world-class products, increase brand awareness, expand product categories and improve distribution while staying true to the core user.”
Clarus Executive Chairman Warren Kanders says the acquisition “caps off our strategy to build a leader in specialty premium bullets and ammunition.”
The Barnes acquisition, he says, also shows the company’s “ability to patiently wait for strategic assets at attractive values.”
When all the deals are finalized, whether today or shortly afterwards, Remington, once the only U.S. producer of both firearms and ammunition, will only be a fading shadow of the company founded by Eliphalet Remington II in 1816. Ultimately, bankruptcy is an opportunity for some to benefit from the missteps of others. Few could argue there were more missteps at Remington that in a first-day ballroom dance class. Unfortunately the upper level managers ultimately responsible for the failure seldom pay the ultimate price. They move on.
For the employees, however, it seldom works out that way.
We’re told Remington’s workers have already been informed that Friday is the end of their line