The Wall Street Journal is reporting that Cerberus Capital Management plans to sell their firearms manufacturing arm in the wake of the Newtown tragedy. Their statement below says that they don’t want to be pulled into a national political debate concerning firearms.
Cerberus Capital Management Statement Regarding Freedom Group, Inc.
NEW YORK, Dec. 18, 2012 /PRNewswire/ — We were shocked and deeply
saddened by the events that took place at the Sandy Hook Elementary
School in Newtown, CT on December 14, 2012. We cannot comprehend the
losses suffered by the families and friends of those killed by the
unthinkable crimes committed that day. No words or actions can lessen
the enormity of this event or make a dent in the pain that was inflicted
on so many.
In 2006 affiliates of Cerberus Capital Management, L.P. made a
financial investment in Freedom Group. Freedom Group does not sell
weapons or ammunition directly to consumers, through gun shows or
otherwise. Sales are made only to federally licensed firearms dealers
and distributors in accordance with applicable laws and regulations. We
do not believe that Freedom Group or any single company or individual
can prevent senseless violence or the illegal use or procurement of
firearms and ammunition.
It is apparent that the Sandy Hook tragedy was a watershed event that
has raised the national debate on gun control to an unprecedented
level. The debate essentially focuses on the balance between public
safety and the scope of the Constitutional rights under the Second
Amendment. As a Firm, we are investors, not statesmen or policy makers.
Our role is to make investments on behalf of our clients who are
comprised of the pension plans of firemen, teachers, policemen and other
municipal workers and unions, endowments, and other institutions and
individuals. It is not our role to take positions, or attempt to shape
or influence the gun control policy debate. That is the job of our
federal and state legislators.
There are, however, actions that we as a firm can take. Accordingly,
we have determined to immediately engage in a formal process to sell our
investment in Freedom Group. We will retain a financial advisor to
design and execute a process to sell our interests in Freedom Group, and
we will then return that capital to our investors. We believe that
this decision allows us to meet our obligations to the investors whose
interests we are entrusted to protect without being drawn into the
national debate that is more properly pursued by those with the formal
charter and public responsibility to do so.
Our thoughts and prayers are with the families and communities impacted by this tragic and devastating event.
The Freedom Group which has been renamed Remington Outdoor Company, Inc. consists of Remington, Bushmaster, DPMS/Panther Arms, Remington Military, Remington LE, Parker Gunmakers, Barnes Bullets, Advanced Armament, Tapco, Dakota Arms, Marlin, Para-USA, H&R, Mountain Khakis, and Remington PMPD.
Among the upper management of Cerberus are such political figures as former VP Dan Quayle and former Treasury Secretary John Snow. Steve Feinberg, CEO of Cerberus, is reportedly an avid hunter and shooter. According to the Journal, Cerberus came under pressure from certain investors to sell the unit.
Cerberus’s statement comes shortly after it faced pressure Monday from
former New York Governor Eliot Spitzer as well as the California State
Teachers Retirement System, which said it is reviewing a $500 million
investment commitment to the New York-based private-equity firm.
I find the move by Cerberus to sell Freedom Group aka Remington Outdoor Company much more disturbing than the nonsense coming from the gun prohibitionists and their politician allies. To me it seem a great harbinger of the difficulties that lie ahead for us with regards to gun rights. Investment capital companies such as Cerberus are known to make decisions on numbers and fact without dealing in emotion. They obviously feel that the business environment for them will be difficult in the days ahead due to political forces. The Freedom Group companies manufacture a lot of AR-15s and these are the focus of the gun prohibitionists.
For the firearms industry, this move by Cerberus may actually be beneficial. If the new owners of Remington Outdoor Company are not beholden to public employee/union pension funds and other institutional investors, it will be a good thing. The unity of the firearms industry in the face of the threat of legislation is paramount. They don’t need the management of one of the major players to go wobbly such as is evident in the response of Cerberus.