Heckler & Koch Primary Shareholder Injects 60 Million Euros Into Company
Heckler & Koch announced on the 17th that the primary shareholder, Andreas Heeschen, has provided H&K’s GmbH’s parent company, H&K AG with 60 million Euros. The new shareholder loan is to assist with H&K GmbH’s cashflow and repayment of various outstanding loans.
In the firearms industry, this is a rare move and shows Mr. Heeschen’s confidence in the Heckler & Koch company. Demand for firearms in Europe is increasing due to various social and economic factors including the Syrian refugee crisis and escalating tensions between powers including Russia.
Its also convenient timing, as the H&K G36 has been vindicated of its supposed accuracy issues. We at TFB were one of the few outlets defending the rifle against accusations that the zero would wander under adverse conditions. Even with the G36 resolved, the company still has issues facing it including the recent arrest of ex-employees illegally exporting firearms to Mexico.
The move, including a recent draw of 15 million Euros on a secured credit line is assisting with covering an outstanding 9.5% Senior Secured Note due in 2018. However, the company still will have over 200 million Euros of outstanding debt, which recently resulted in a reduction of the company’s credit rating by Moody’s and Standard & Poor.
One of TFB's resident Jarheads, Nathan now works within the firearms industry. A consecutive Marine rifle and pistol expert, he enjoys local 3-gun, NFA, gunsmithing, MSR's, & high-speed gear. Nathan has traveled to over 30 countries working with US DoD & foreign MoDs.The above post is my opinion and does not reflect the views of any company or organization.
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I have no sympathy for these miscreants, they have a cash cow in the USA which they have ignored these many years. Plus now that they find themselves in a quagmire of ignorance and credit liabilities someone is putting the proverbial foot up their backside, so they can make a competent universal business decision or lose everything! Plus they are absolutely quaking in their boots over the Muslim hordes of invaders taking over their countries, while their government runs a lance through their throats and ignores their pleas for assistance.
If you read the story published by Bloomberg it says that Heeschen now owns only 51% of H&K, down from the 100% he previously owned. That means he's sold half the Company. It is obvious that he had no choice and the money he received for his shares was absolutely necessary to prevent the Company from going bankrupt. In case anyone doesn't know, H&K has €295 million of outstanding debt at 9.5% interest plus a further €45 million convertible bond, which means it must pay around €30 million in cash out of the Company each year. Turnover has dropped well below €200 million, so the Company is struggling yo generate sufficient cash to remain afloat longterm let alone enough to support ongoing CAPEX and R&D.
H&K is an absolutely amazing company with the strongest product line of any small arms manufacturer. It is so sad to sit what is otherwise a strong business struggling to repay the debt imposed on it by its owners. Germany's attitude to arms exports is further crippling H&K. Without US manufacturing it is dead in the water. However, the Friday before AUSA, H&K closed its Newington, NH facility. It cannot survive selling the VP9 and VP40.
German newspapers reported that Heeschen threatened to sue the German MoD over the G36 problems. The Rifle may have been vindicated, but threatening to take legal action against your biggest customer is hardly a good strategy if you want to win a new rifle contract.
I'd like to see a US boycott of H&K that forces the current owners to sell the Company to someone who is serious about investing in its products, its people, its customers, and its future.