The Column, No. 120:
The Latest Chapter in the Remington Saga: Chapter 11
There is a lot of interest and banter associated with Remington's announcement to reorganize under Chapter 11 bankruptcy laws. The name Remington is often used as if it is a family owned company. That's hardly the case.
On March 7, 1888, ownership of E. Remington & Sons was sold by the Remington family to new owners, Marcellus Hartley and Partners. This consisted of Hartley and Graham of New York, New York, a major sporting goods chain who also owned the Union Metallic Cartridge Company in Bridgeport and the Winchester Repeating Arms Company of New Haven, both in Connecticut.
Yes, it was a chain of sporting goods stores that owned Winchester and Remington in the late 1800s. The fantasies about Oliver Winchester and Eliphalet Remington running much of anything in a modern sense is just that, fantasies. Eliphalet Remington passed in 1861. Oliver Winchester died in December 1880; his son and successor, William Wirt Winchester, died of tuberculosis four months later.
There is more to the Remington story than that, of course. In 1912 Remington merged with Union Metallic Cartridge to become Remington UMC. In the 1930s, Remington was acquired by DuPont and the Company benefited from decades of stable ownership.
In 1993, DuPont sold Remington to Clayton, Dubilier & Rice, an investment firm. In 2007, Remington Arms Co. Inc. agreed to be acquired by private equity firm Cerberus Capital Management LP for $370 million. The purchase priced includes $118 million in cash as well as the assumption of $252 million of debt, including a revolving credit line and subordinated notes.
The year before, Cerberus had purchased Bushmaster and was assembling a firearms conglomerate. The company known today as Remington Outdoor was cobbled together by Cerberus, starting with Bushmaster in 2006.
In 2007, "Remington bought Marlin." Well, not exactly, for Remington was just freshly acquired itself and hardly in a position to buy other companies. Cerberus actually bought Marlin. The deal closed in January, 2008.
They also acquired Harrington & Richardson / NEF, then owned by Marlin. Marlin reportedly was a sucked orange, a company with worn-out tooling that, stunningly, had no production blueprints for many of its products. H&R / NEF production was moved to the Remington Ilion, NY plant in 2008 and terminated in 2015. The Marlin factory was closed in 2010 and Marlin production moved to Remington factories.
None of this was a particularly massive move by Cerberus, who also bought Chrysler in 2007. The "Freedom Group" was a construct of Cerberus. Whether Bushmaster, Marlin, or Remington were wise acquisitions by Cerberus in the first place, history will judge.
The sagging AR-15 market is something to which Cerberus exposed itself, not Remington, for the Bushmaster acquisition came first. The current debt that Remington Outdoors is restructuring is hardly all due to Remington.
The Bushmaster component has had its problems, for it was a stolen Bushmaster used in the Beltway Sniper attacks in October, 2002. Associate legal fees (and a $500,000 payout) helped set the stage for Bushmaster's later sale to Cerberus.
With the Sandy Hook massacre in 2012, it was again a stolen Bushmaster. A deranged 20 year old pumped four shots from a Savage .22 rimfire into the head of his mother, killing her to get control of her legally owned Bushmaster and her legally owned car. No one seems to care about the stolen car, without which the tragedy would not have happened.
In 2015, the Freedom Group was renamed Remington Outdoor Company, but what Cerberus had constructed could not be sustained with litigation and the downturn in the gun market after the Democrats lost the 2016 Presidential and Congressional elections. The Obama gun boom, fueled by fears of confiscation, was over.
With the Chapter 11 restructuring, Cerberus is out of the picture, losing any and all ownership of Remington Outdoor and the former Freedom Group set of companies. The Cerberus adventure into the firearms industry leaves them with goose eggs.
Along the way, Cerberus had help, though. Help from the state of New York, which passed the not so "S.A.F.E ACT" in 2013. It is an attack on the Constitution and an attack on the firearms industry. It had no significant effect on crime, of course. It does make it difficult for gun companies to operate in New York. For similar reasons, Weatherby recently decided to flee California for Wyoming.
Why would any business want to pay taxes to a government entity that seeks to destroy them? Marxist/Socialist/Liberal/Progressive politicians still seek to convert rights into privileges and have no problem taxing rights. It is a pity that there is no tax on government officials and agencies using extraneous words paid for by American taxpayers.
The end result of all this is the turning of an artificially created, unsustainable business model into a sustainable one. We can hope this is a good thing, a very good thing, for Remington.
Copyright 2018 by Randy Wakeman. All rights reserved.