Remington Outdoor, one of the most iconic names in gun manufacturing, is planning to file for bankruptcy protection after reaching an agreement with creditors to restructure its $950 million debt load.
The planned Chapter 11 filing is a recognition of Remington’s struggles amid declining sales linked, at least in part, to reduced fears among gun owners that the U.S. government will impose more regulations on buying firearms.
In the first three quarters of 2017, Remington’s sales fell 27.5% to $466.7 million, pushing it into the red.
The company, which is controlled by private-equity firm Cerberus Capital Management, said Monday it had reached an agreement with creditors that would slash its debt by about $700 million and provide about $145 million of new operating capital, “markedly strengthening the company’s consolidated liquidity, balance sheet, and long-term competitiveness.”
The restructuring would be implemented through a pre-packaged plan of reorganization to be filed in bankruptcy court.
“Difficult industry conditions make today’s agreement prudent,” Executive Chairman Jim Geisler said in a news release. “I am confident this regrouping ensures that Remington will continue as both a strong company and an indelible part of our national heritage.”
As CNN Money reports, gun sales surged to record levels in 2016 amid fears Democratic presidential candidate Hillary Clinton would implement gun controls. When Trump, who has called himself a “true friend” of the gun industry, was elected, those fears eased but sales also dropped off.
In addition, Remington has found it hard to attract new investors since the 2012 massacre at Sandy Hook elementary school in Newtown, Conn., where the gunman used, among other weapons, a Remington Bushmaster assault rifle.
Once the restructuring is completed, Cerberus will no longer own Remington, while creditors will receive equity in the company in exchange for the debt being written down.
“Importantly, the fundamentals of our core business remain strong,” CEO Anthony Acitelli said. “We have an outstanding collection of brands and products, the unqualified support of a vibrant community across the industry, and a deep and powerful culture.”