Cerberus Allows Cash-Out Of Remington

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Cerberus, the financial group that owns Remington and the other members of the former Freedom Group, have met with no success in selling the company, an effort that began due to political pressures from its investors. The Wall Street Journal reports:

Cerberus Capital Management LP told its investors Friday that it has created an avenue for them to sell their stakes in a gun maker that the private-equity firm has been under pressure to divest since the Sandy Hook school shooting in 2012.

Cerberus sent a letter to its investors, which include pension funds and endowments, telling them that it has separated Remington Outdoor Co., the maker of Remington and Bushmaster rifles formerly known as Freedom Group Inc., from its funds and will allow any investor wishing to cash out of the company to do so, according to a person familiar with the letter.

Remington will use the proceeds from a 2013 debt sale to pay investors who choose to divest their stakes, the person said.

Cerberus said in the letter that the company’s value, including debt, was about $880 million, the person said.

The WSJ article references a somewhat more politically charged New York Times article.

Remington has been beset by so many issues over the past few years that it is hard to tell where the financial trials end and the product stumbles begin. Hopefully the financial reorganization will bring a second wind to Remington, but only time will tell.

Thanks to Daniel for the tip.

 

 

 



Nathaniel F

Nathaniel is a history enthusiast and firearms hobbyist whose primary interest lies in military small arms technological developments beginning with the smokeless powder era. In addition to contributing to The Firearm Blog, he runs 196,800 Revolutions Per Minute, a blog devoted to modern small arms design and theory. He can be reached via email at nathaniel.f@staff.thefirearmblog.com.


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  • Ben

    Cerberus forgot Warren Buffet’s rule of business;

    “We can lose money. We can lose a lot of money. But we can never allow harm to come to our reputation”.

  • Lou

    This is what happens when these umbrella companies who do not know the gun industry or culture buy up firearm companies and think that they can do it better. The Freedom Group and Cerberus have destroyed the identity and proud history of every brand they acquired. Just look at the executive management that got hired after acquisitions were made. Most had no personal interest in firearms, were not gun owners, no experience in the firearms or defense industries, etc. The “bean counters” at Cerberus thought that by firing all of the marketing managers and directors of each of the brand’s and placing a handful of marketing people ( who came from other industries) to oversee all companies that they would save payroll – this destroyed the identity of this brand’s and led them way off course. If you ever attended the NRA show or SHOT Show, you may know what I am stating here. Great companies like H&R and Marlin had their products all intermixed/thrown in with historic Remington – no respect for the brand’s identity nor properly managed. This along with horrible ad and marketing campaigns developed by people who are not “gun guys” is the real issue with them. Many other large firearm companies are doing the same. Vista Group has made a Vice President of Marketing out of a Gerber baby food & grocery store chain executive recently who isn’t a gun guy either. When they take over a company, they can’t wait to push out the people that really know the firearms industry or as in the case of DPMS, chase out the family members of the guy that created that great company.

    • Well said, though I’d argue Remington had a lot of problems before being purchased.

      • TFB Reader

        Well, anything can happen, but most of the Vista people are from ATK, which started as an aerospace and defense contractor in 1990 (spun off from Honeywell) and got into the firearms business through acquisitions beginning in about 2001. I’m not sure what percentage of ATK’s business came from firearms, but they didn’t run everything into the ground. Are they “gun people?” I don’t know, but they only have one gun manufacturing brand, Savage, to screw up.

        Ruger got things straightened out a few years back and look better all the time.

        • iHAL

          We used to get ATK reps, execs, and factory workers in my old shop all the time. They are definitely gin people.

          • iHAL

            Sorry, *gun* people. Drink wise I don’t know. They came in sober.

    • Beju

      You could say that this is what happens when Cerberus acquires any company. Their ownership of Chrysler LLC didn’t result in anything good. They appointed Bob Nardelli as CEO AFTER he’d effed up Home Depot.

      • JumpIf NotZero

        Lol, Nardelli… The awkward angel of death. I’m nearly convinced that they only bring him in when they want to make a company to fail. The wierd thing is he’s extrmely poor at running an effective company and also sort of crappy at intentionally destroying a company… So it’s very hard to tell if it’s on purpose. Maybe he’s a genius at only appearing ineffective, who knows!?

      • raz-0

        Cerberus likes to acquire a company and borrow against it as heavily as possible. The company either manages to up profitability and service the debt, or is liquidated and sold off.

        The freedom group brands are a problem there because they over leveraged them during a boom and are trying to unload them during a bust cycle AFTER having screwed up the management of those companies. All while having probably not met their usual criteria for this treatment because it was a pet project of senior management.

        The only one who wanted to buy it off them is said senior management, and of course he doesn’t want to buy at a price that will pay off the debt.

        I wonder if this is some variation on that plan.

    • Budogunner

      Agreed. I can’t go into detail, but I had professional interaction with Remington via AAC (which was under Remington’s thumb at the time) and I got to watch the meltdown happen. It wasn’t pretty. Lots of good people got fired for bad reasons.

      • JumpIf NotZero

        I still remeber dumbdumb buying/leasing and posting pictures of a new Lambo when the deal went through… This move is going to allow us to ship so much product, no delays on AAC parts ever again, much/such/so new products coming, etc. Then in 6-12months 1/2 his people are already gone when he’s fired too. Lambo Dreams… lol.

    • Ryan

      As much as I want to agree with that sentiment, that kind of blanket statement has a great big hole in it, Oliver Winchester. Winchester was a shirt maker who didn’t know squat about guns, invested heavily into a gun company that would lose some of its best employees like Horace Smith, Daniel Wesson, and Benjamin Henry, and moved the whole operation to a different state(sound familiar?), and restructured the company. The result of course was one of the most famous and successful gun companies of all time. People who aren’t “gun guys” can run firearm companies too.

      • Lou

        Ryan. It is not a blanket statement and it is obvious that you have never worked in the industry at an executive or management level in a large firearms company since you have cited a gun industry example that is over 130 years old. Also, Oliver Winchester was an expert in manufacturing and machinery, a far cry from most of the baffoons who are hired to run gun companies today who don’t know the difference between a mill and a lathe. I have worked at the executive and mid- level executive positions in the firearms industry for some of the biggest names (not garage sized manufacturer custom shops) and racked up a 9 page resume since 1982. Here are some examples of firearm industry hires in addition to the one I gave above: 1)a Vice president of Law Enforcement/Military Sales that never owned a gun or was a cop or in the military, 2) a CEO who came from a power tool company that stated that as far as consumer sales, a handgun is the same as a power tool – not a gun guy either, 3) a VP of Military/LE that never fired a handgun then later left this company and climbed the ladder at two other gun companies to become CEO of another large firearms company only to get fired for one of the most disastrous firearm product launches in industry history, 4) a toilet salesman from a large home product company becomes VP of Marketing with virtually no gun experience and performs poorly, 5) dozens of new marketing managers who are not gun owners – how they can write compelling ads to compel potential customers to do something that they have never done themselves like buy a gun??? 6) a director of LE and export LE/commercial sales who is a foreigner and who does not believe in private gun ownership, 7) a head of engineering that is not allowed to own the guns he helps design because his wife won’t let him, etc., etc., etc.. I can keep going on but the examples given above are REAL examples from three of the largest gun manufacturers in the world – most of which have been fired or will be very soon. It is extremely rare that a non “gun guy” can be successful in the gun industry.

        • Ryan

          You got me, I’m not one of the hundreds, perhaps thousands of people who have worked at an executive or management level in a large firearms company. I’m just one of the rest of the 300 million other Americans who still have an opinion on things, as are probably everyone else commenting on this website. Get down off your high horse. I doubt any employee in any industry hasn’t seen someone without a clue at a management position. It still doesn’t mean that someone not familiar with the industry can’t provide a positive outcome, as Winchester proved. There are plenty of gun companies that go down with gun people at the helm too. I won’t argue the odds are far better with gun people in place, but we can’t argue that sometimes a fresh perspective is needed.

  • David Daly

    I own several Remington, and find them to be an acceptable product. not as good as they were in their heyday but still the acceptable product.

    • David

      “acceptable” is not much of an endorsement. I for one, will not buy Remington anymore. Much better product out there for the same or less money.

    • Why spend hundreds of dollars on “acceptable” when quality is literally sitting next to it on the rack for a similar price?

    • AC10

      For the life of me I don’t know why one would buy an Remington 870 when you can buy a Mossberg 500 which is backed up with a 10-year warranty.

  • JODY

    But BUT BUT what happen to REM MILITARY???? MMMa aaaa waaaa???

  • SD3

    Does this mean I can buy a Marlin, now?….

  • Taofledermaus

    cough – No politics – cough 😉

  • JumpIf NotZero

    Lol, 800 million with debt huh? I know for a fact that a large firearms company was looking at buying Remington and friends for 250 million, and decided it wasn’t worth it when debt and assets were all totaled.

    I know pressers are always fluffed, but that’s some pretty seriously showmanship to come up with their number. It’s… Optimistic.

  • PatrickHenry1789

    I bought a Remington 700 30-06 about 3 years ago now. It’s been back to Remington 4 times now. Three times for warranty repair that they never really repaired and once for a recall. I don’t think I’ll be buying another Remington product anytime soon.

  • James Massman

    Just found this at Wikipedia (so, you know the source, it just might not be so, but here it is):

    “In March 2012, Robert Nardelli stepped down as CEO of Freedom Group and as head of the operations and advisory business of Cerberus Capital Management LP and became adviser to Stephen Feinberg, the head and founder of Cerberus. He became CEO of Freedom Group in September 2010 as the North Carolina-based gun maker searched for a permanent CEO. The new chief executive is George Kollitides, formerly working as managing director for Cerberus who was leading the Freedom Group deal.[5]

    In December 2012, citing the Sandy Hook Elementary School shooting as “a watershed event that has raised the national debate on gun control to an unprecedented level,” Cerberus announced it would sell all of its investments in Freedom Group. The private equity firm said it would retain a financial adviser to sell its interests in Freedom Group, and would return the proceeds to investors.[6][7] The decision was made after a California pension board, a Cerberus stakeholder, announced it would dispose of all stakes it held in firearms manufacturers that make weapons banned by state law. As of December 2013, Cerberus still owned the company, but planned to offer investors a means to sell their interest in Freedom Group.[8]”
    for what it’s worth… Jim

  • joedakota

    It is just not gun companies that are run by idiots, Sears, K-mart, Circuit City, Quincy Steak house, are all examples of the manager types that are being turned out by colleges. I could name more but the point is there is no longer an MBA that knows any thing.