Remington selling ammo business

Hope they don't go down hill. Remington extended range high brass birdshot has been my go to brand for hunting for a long time. Their rimfire ammo has always sucked though.
 
Seems like a giveaway to me. Someone can produce enough ammo to recoup their investment in no time the way things are headed. I haven't bought any factory ammo since 2008 so it is just a guess on my part.


-Correction, I bought some Hornady 45/70 in 2009.
 
Risky time to get into the ammo business with an election right around the corner..i guess they are feeling confident about DJT..
 
Fixxah said:
Seems like a giveaway to me. Someone can produce enough ammo to recoup their investment in no time the way things are headed. I haven't bought any factory ammo since 2008 so it is just a guess on my part.


-Correction, I bought some Hornady 45/70 in 2009.
Click to expand...

I don't know about that. If the sale includes assumption of dept, there is a strong possibility Remington wasn't making a profit while things were priced so low just 6 months ago. Sure, you might be making higher margins now when people are willing to shell out silly prices for ammo, but how long will that take to break even on that $65M + dept, and will it be a race depending on how the election goes?

One positive (or negative, if you happened to be an employee) is that whoever buys the ammo biz can lower labor costs by wiping all non-key positions, effectively resetting the pay rates to baseline. I assume labor outweighs cost of goods sold in this business as far as expense is concerned. This is crucial in a business where you're literally making pennies on the dollar per unit.
 
Quite_Exasperated said:
Risky time to get into the ammo business with an election right around the corner..i guess they are feeling confident about DJT..
Click to expand...
The contrary would be more likely. The chaos Dems plan for this election process, which will last for months, will keep demand for ammo sky-high. So will the large number of first-time firearm buyers who want to practice their new sport.
 
TrashcanDan said:
Not surprised.
What was that investment group that bought Remington and Marlin and a few others all within a short period several years back?
Click to expand...
Cerberus. Pulled all the equity out of Remington then loaded them up with debt and dumped them. Also bought Chrysler and raped them too.

'In order to buy Remington, Cerberus, as most private-equity firms would, created a new entity, a holding company. Instead of Cerberus buying a gun company, Cerberus put money into the holding company, and the holding company bought Remington. The entities were related but — and this was crucial — each could borrow money independently. In 2010, Cerberus had the holding company borrow $225 million from an undisclosed group of lenders, most likely hedge funds. Because this loan was risky — the lenders would be paid only if Remington made a lot of money or was sold — the holding company offered a generous interest rate of around 11 percent, much higher than a typical corporate loan. When the interest payments were due, the holding company paid them not in cash but with paid-in-kind notes, that is, with more debt. These are known as PIK notes.

The holding company now had $225 million in borrowed cash. Cerberus, meanwhile, owned most of the shares of the holding company’s stock, basically slips of paper they acquired when they created the holding company. The handoff happened next: The holding company spent most of the $225 million buying back its own stock, effectively transferring all the borrowed cash to Cerberus. Cerberus would keep that money no matter what. Meanwhile Remington continued rolling along as though nothing had happened, because Remington itself was not responsible for the holding company’s debt. Remington was just an “operating company” that the holding company owned, something that allowed the holding company to borrow money, the way you would take a necklace to a pawnshop. These were garden-variety maneuvers in a private-equity buyout. In the trade, this is called “financial engineering.” People get degrees in it.

In April 2012, Cerberus did something fateful, which probably seemed smart at the time. It had Remington borrow hundreds of millions of dollars and use it to buy the holding company’s debt, effectively transferring responsibility for the principal and the interest payments onto Remington. America’s oldest gun company now owed the money that Cerberus had used to pay itself back for having bought the company in the first place. There were plenty of sensible reasons to do this. Gun sales were high, and the debt that Remington took out was cheaper to service than the paid-in-kind debt.

But there was a catch. Because the operating company borrowed the money with a normal loan — and not with PIK notes — interest payments were required in cash. Suddenly Remington was carrying hundreds of millions of dollars in debt that, if it could not be paid, would cause the business to go bankrupt.

By the time the factory opened in Huntsville, the various players stood in vastly different positions. The private-equity firm had made back its initial investment and was playing with house money. Remington owed hundreds of millions that it hadn’t borrowed. And its workers, urgently, had to make a lot of guns.'

The Captain's Journal » How Cerberus Drove Remington Out Of Business
 
Last edited:
TrashcanDan said:
Not surprised.
What was that investment group that bought Remington and Marlin and a few others all within a short period several years back?
Click to expand...

There is that yin and yang thing about conglomeration. Actually it's closer to my yingyang. Definitely in the sub-cockel region. ;)

But we've gone through many cycles of "combine" and "split" in my lifetime. LTV Steel back in teh 60's owned a pile of non-related businesses. On the theory that they could make $ because upper mgmt wouldn't be duplicated. Gulf Western owned. . . . . Paramount Studios I think in the 70's. People like Spielberg, Lucas, Scorcese and John Milius exploded b/c big conglomerates owned the studios and produced absolute crap for too long. Get 4 young filmmakers that KNEW how to make films and BOOM. But the industry was owned by non-industry folks and it was a disaster.

So that all ended. The studios were spun off. LTV went bankrupt. No more conglomerates. But then they started again in the 80's. The big pre-87 deals. RJR and such. First they were conglomerated. Then they were broken up by others who were corporate raiding.

In the last 20 years, it's been quieter, but it's these firm like Obsequius or whatever (Mobius? Morpheus? Testiculus??) that buy up a whole bunch of companies, shift the debt and such around, jettison off the now-crap and then hold the jewels.

It's all perfectly legal. It's really really stupid. It harms industries. Hell, even Oliver Stone realized that in Wall Street. LOL

Broccoli Iglesias said:
Buy it, sell all the primers and bullets in 3hrs, make a profit, sell it again.
Click to expand...

I'm betting in the current environment that if they had that much finished-goods inventory, they should be b-slapped in the first place.


Here's the funny - what's gonna happen when Remmy won't sell ammo to mASS and CA and such. [rofl]
 
Back in the day when I was shooting .22 bullseye matches, I used Remington .22 for practice ammo.
One night a round didn't fire, so I rotated it in the chamber and refired.
Did it 10 times, never fired, had 10 firm hits on the rim.
Always used CCI in matches.
 
Knob Creek said:
Remington is up the creek and now they’re selling the paddle.
Click to expand...

I could see S&W maybe buying them for the shotgun and levergun business since they don't have those in their lineup. Assuming the debt could be discharged. Ditto for Ruger.

They'll probably get purchased by some other vulture capital Harvard MBA a**h***s though and spread sheet gamed into an even worse position.
 
The buyers better not [beep] with Remington’s STS and Gold Nitro shotgun rounds. Not only were they good factory rounds, but the hulls could be reloaded 2x as many times as the Winchester AAs, if not more.

Now I’m kicking myself for not buying an extra couple of cases (250 rounds for shotgun, generally speaking) last summer or the summer before.
 
Knob Creek said:
Cerberus. Pulled all the equity out of Remington then loaded them up with debt and dumped them. Also bought Chrysler and raped them too.

'In order to buy Remington, Cerberus, as most private-equity firms would, created a new entity, a holding company. Instead of Cerberus buying a gun company, Cerberus put money into the holding company, and the holding company bought Remington. The entities were related but — and this was crucial — each could borrow money independently. In 2010, Cerberus had the holding company borrow $225 million from an undisclosed group of lenders, most likely hedge funds. Because this loan was risky — the lenders would be paid only if Remington made a lot of money or was sold — the holding company offered a generous interest rate of around 11 percent, much higher than a typical corporate loan. When the interest payments were due, the holding company paid them not in cash but with paid-in-kind notes, that is, with more debt. These are known as PIK notes.

The holding company now had $225 million in borrowed cash. Cerberus, meanwhile, owned most of the shares of the holding company’s stock, basically slips of paper they acquired when they created the holding company. The handoff happened next: The holding company spent most of the $225 million buying back its own stock, effectively transferring all the borrowed cash to Cerberus. Cerberus would keep that money no matter what. Meanwhile Remington continued rolling along as though nothing had happened, because Remington itself was not responsible for the holding company’s debt. Remington was just an “operating company” that the holding company owned, something that allowed the holding company to borrow money, the way you would take a necklace to a pawnshop. These were garden-variety maneuvers in a private-equity buyout. In the trade, this is called “financial engineering.” People get degrees in it.

In April 2012, Cerberus did something fateful, which probably seemed smart at the time. It had Remington borrow hundreds of millions of dollars and use it to buy the holding company’s debt, effectively transferring responsibility for the principal and the interest payments onto Remington. America’s oldest gun company now owed the money that Cerberus had used to pay itself back for having bought the company in the first place. There were plenty of sensible reasons to do this. Gun sales were high, and the debt that Remington took out was cheaper to service than the paid-in-kind debt.

But there was a catch. Because the operating company borrowed the money with a normal loan — and not with PIK notes — interest payments were required in cash. Suddenly Remington was carrying hundreds of millions of dollars in debt that, if it could not be paid, would cause the business to go bankrupt.

By the time the factory opened in Huntsville, the various players stood in vastly different positions. The private-equity firm had made back its initial investment and was playing with house money. Remington owed hundreds of millions that it hadn’t borrowed. And its workers, urgently, had to make a lot of guns.'

The Captain's Journal » How Cerberus Drove Remington Out Of Business
Click to expand...
The heads of Cerberus should be put on a pike.
 
Knob Creek said:
Cerberus. Pulled all the equity out of Remington then loaded them up with debt and dumped them. Also bought Chrysler and raped them too.

'In order to buy Remington, Cerberus, as most private-equity firms would, created a new entity, a holding company. Instead of Cerberus buying a gun company, Cerberus put money into the holding company, and the holding company bought Remington. The entities were related but — and this was crucial — each could borrow money independently. In 2010, Cerberus had the holding company borrow $225 million from an undisclosed group of lenders, most likely hedge funds. Because this loan was risky — the lenders would be paid only if Remington made a lot of money or was sold — the holding company offered a generous interest rate of around 11 percent, much higher than a typical corporate loan. When the interest payments were due, the holding company paid them not in cash but with paid-in-kind notes, that is, with more debt. These are known as PIK notes.

The holding company now had $225 million in borrowed cash. Cerberus, meanwhile, owned most of the shares of the holding company’s stock, basically slips of paper they acquired when they created the holding company. The handoff happened next: The holding company spent most of the $225 million buying back its own stock, effectively transferring all the borrowed cash to Cerberus. Cerberus would keep that money no matter what. Meanwhile Remington continued rolling along as though nothing had happened, because Remington itself was not responsible for the holding company’s debt. Remington was just an “operating company” that the holding company owned, something that allowed the holding company to borrow money, the way you would take a necklace to a pawnshop. These were garden-variety maneuvers in a private-equity buyout. In the trade, this is called “financial engineering.” People get degrees in it.

In April 2012, Cerberus did something fateful, which probably seemed smart at the time. It had Remington borrow hundreds of millions of dollars and use it to buy the holding company’s debt, effectively transferring responsibility for the principal and the interest payments onto Remington. America’s oldest gun company now owed the money that Cerberus had used to pay itself back for having bought the company in the first place. There were plenty of sensible reasons to do this. Gun sales were high, and the debt that Remington took out was cheaper to service than the paid-in-kind debt.

But there was a catch. Because the operating company borrowed the money with a normal loan — and not with PIK notes — interest payments were required in cash. Suddenly Remington was carrying hundreds of millions of dollars in debt that, if it could not be paid, would cause the business to go bankrupt.

By the time the factory opened in Huntsville, the various players stood in vastly different positions. The private-equity firm had made back its initial investment and was playing with house money. Remington owed hundreds of millions that it hadn’t borrowed. And its workers, urgently, had to make a lot of guns.'

The Captain's Journal » How Cerberus Drove Remington Out Of Business
Click to expand...

This too:

www.nytimes.com

How America’s Oldest Gun Maker Went Bankrupt: A Financial Engineering Mystery (Published 2019)

When a secretive private equity firm bought Remington, sales were strong and the future bright. A decade later, the company couldn’t escape its debts.
www.nytimes.com www.nytimes.com
 
citoriguy said:
The buyers better not [beep] with Remington’s STS and Gold Nitro shotgun rounds. Not only were they good factory rounds, but the hulls could be reloaded 2x as many times as the Winchester AAs, if not more.

Now I’m kicking myself for not buying an extra couple of cases (250 rounds for shotgun, generally speaking) last summer or the summer before.
Click to expand...
Yup. TS was getting like $125 a case for the STS now?
 
ThePreBanMan said:
Their accuTip slugs hit like Thor’s hammer on whitetail and can drive nails out to 75 yards... Same hole groups in my 11-87. They’re awesome.
Click to expand...
Let me not forget those. Super accurate. I was hitting a little 3 inch steel plate consistently at 100 yards with a 3x9 scope. I only have two left from last year’s 2x 5 packs. 1 pack for sighting in. The other pack? 2 for each deer and one miss. 2 left.
798A092D-7B35-407B-BA14-89E08EA2F931.jpeg C8340CD2-07C6-4878-AC75-13259CD6D074.jpeg
 

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