Roundhill Group On Remington Purchase

There has been a lot of speculation on the Roundhill Group that purchased the non-Marlin firearms business of Remington Outdoor Company. Some reports had them as a property management company in Virginia which just didn’t quite fit. They are now identified as an investment company with headquarters in Pennsylvania and Florida.

From a post on SBG Media:

Roundhill Group, LLC, an investment company with headquarters in Pennsylvania and Florida, announced that it is purchasing Remington Firearms. The purchase includes all long guns, shotguns, pistols, the firearms manufacturing facilities, museum, and gift shop.

Roundhill Group LLC partner and spokesman, Jeff Edwards addressed questions regarding the acquisition:

“As is known, Roundhill Group LLC and a group of experienced firearms manufacturing and hunting industry professionals are in the process of purchasing Remington Firearms. Our intent with this acquisition is to return the company to its traditional place as an iconic American hunting brand. We intend to maintain, care for and nurture the brand and all of the dedicated employees who have crafted these products over the years for outdoorsmen and women both here in the USA and abroad. More than anything, we want to make Remington a household name that is spoken with pride.”

Edwards added, “The Roundhill Group is comprised of a group of individuals all of whom have years of experience in engineering, manufacturing and marketing both in and outside of the firearms space. They are all life-long hunting advocates and staunch Remington brand loyalists. They will work tirelessly to ensure that this company takes its rightful place as the iconic American brand that it was and still is.”

According to the court documents, the winning bid was for $13 million and this has been approved by the US Bankruptcy Court of the District of Northern Alabama.

We still don’t know too much about this group so I am anxious to see that comes out about them in the following days and weeks in the run-up to the SHOT Show.

Ruger On Marlin Assets Purchase

Ruger is cautious in their public statements. I think that is why they waited until today to make an announcement of their winning bid for the Marlin firearms assets of Remington Outdoor Company. The bid was only approved by the US Bankruptcy Court for the Northern District of Alabama yesterday.

Ruger will be paying $30 million from cash on hand for these assets and expects to close on the purchase this coming month. When Cerberus Capital Management bought Marlin in January 2008, the terms of the deal were not released. However, I think it would be a good assumption that Cerberus paid a lot more than $30 million. In that deal, Cerberus not only got Marlin, but also H&R, New England Firearms, and L.C. Smith.

I think Marlin fans and lovers of lever guns will rejoice given the comments of Ruger CEO Chris Killoy below:

“The value of Marlin and its 150-year legacy was too great of an opportunity for us to pass up,” said Ruger President and CEO Chris Killoy. “The brand aligns perfectly with ours and the Marlin product portfolio will help us widen our already diverse product offerings.”

The transaction is exclusively for the Marlin Firearms assets. Remington firearms, ammunition, other Remington Outdoor brands, and all facilities and real estate are excluded from the Ruger purchase. Once the purchase is completed, the Company will begin the process of relocating the Marlin Firearms assets to existing Ruger manufacturing facilities.

“The important thing for consumers, retailers and distributors to know at this point in time,” continued Killoy, “is that the Marlin brand and its great products will live on. Long Live the Lever Gun.”

As Michael Bane said on his podcast today, Ruger knows how to make firearms and this is good for Marlin.

Vista Outdoor On Bid For Remington Ammo Business

In my email this morning before 8am was a notice that Vista Outdoor had a filing with the Securities and Exchange Commission. It turns out it was their press release on their successful bid for the ammunition business of Remington.

Here is what they are saying, in part, about their winning bid for Remington’s ammunition business:

“Remington ammunition and accessories have a storied role in America’s sporting heritage, with a legacy dating back to 1816,” said Chris Metz, Vista Outdoor Chief Executive Officer.  “We are excited and honored to add the iconic Remington brand and green box to Vista Outdoor’s portfolio of ammunition brands, and Remington accessories to our portfolio of Hunting and Shooting Accessories.  The Remington brand is beloved by hunting and shooting sports enthusiasts everywhere and we look forward to restoring it to greatness by leveraging Vista Outdoor’s scale, manufacturing infrastructure, distribution channels and Centers of Excellence.

“We see a clear path to value creation.  With our deep expertise and resources, we can transform Remington’s ammunition and accessories businesses to create a more efficient, profitable and sustainable operation.  At the same time, by rescuing the Remington ammunition businesses from bankruptcy, we will protect hundreds of jobs, support wildlife and habitat conservation and ensure that hunting and shooting sports enthusiasts can continue to purchase their favorite ammunition and accessories. We look at this acquisition as a means of better serving millions of consumers with the products they love from one of the country’s original and best-known brands, while furthering Vista Outdoor’s mission of being a powerhouse of passionate outdoor sports and recreation brands,” Metz added.

The Vista Outdoor bid was $81.4 million. For that, they will get the Lonoke, Arkansas manufacturing plant plus “intellectual property, including the Remington brand and trademarks.” They will be paying for it with cash on hand plus their credit line. The deal will close early in the 3rd Quarter of 2021.

They noted that Remington had $200 million in ammunition sales for 2019.

Of course, this is all dependent upon the approval of the US Bankruptcy Court for Northern Alabama in their hearings on Tuesday, September 29th.

Remington Outdoor Company Bankruptcy Update

What Cerberus put together to eventually form Remington Outdoor Company aka Freedom Group, the US Bankruptcy Court for Northern Alabama is taking apart. A court filing today has the results of the auction for the various components of the company. It was first reported by Dan Zimmerman at TTAG.

Earlier in September, I reported that JJE Capital was the stalking horse bidder for Remington’s ammunition business. That was to set the floor. The final bids were released today. These will be subject to approval of the court in a hearing to be held on Tuesday, September 29th.

From the Notice filed with the Bankruptcy Court today:

Vista Outdoor, Inc. as the Successful Bidder pursuant to the terms of the Asset Purchase Agreement attached hereto as Exhibit A with respect to the Lonoke Ammunitions Business and certain IP assets; and SIG Sauer, Inc. as the Backup Bidder thereto pursuant to the terms of the Asset Purchase Agreement attached hereto as Exhibit B with respect to the Lonoke Ammunitions Business;
Roundhill Group, LLC as the Successful Bidder pursuant to the terms of the Asset Purchase Agreement attached hereto as Exhibit C with respect to the non-Marlin Firearms Business; and Huntsman Holdings, LLC and Century Arms, Inc. as the Backup Bidders thereto pursuant to the terms of the Asset Purchase Agreement attached hereto as Exhibit D with respect to certain Firearms Business IP assets and Exhibit E with respect to certain non-Marlin Firearms Business inventory, respectively;
Sierra Bullets, L.L.C. as the Successful Bidder pursuant to the terms of the Asset Purchase Agreement attached hereto as Exhibit F with respect to the Barnes Ammunitions Business; and Barnes Acquisition LLC as the Backup Bidder thereto pursuant to the terms of the Asset Purchase Agreement attached hereto as Exhibit G with respect to the Barnes Ammunitions Business;
Sturm, Ruger & Company, Inc. as the Successful Bidder pursuant to the terms of the Asset Purchase Agreement attached hereto as Exhibit H with respect to the Marlin Firearms Business; and Long Range Acquisition LLC as the Backup Bidder thereto pursuant to the terms of the Asset Purchase Agreement attached hereto as Exhibit I with respect to the Marlin Firearms Business;
JJE Capital Holdings, LLC as the Successful Bidder with respect to the DPMS, H&R, Stormlake, AAC, and Parker brands;
Franklin Armory Holdings, Inc., or its designated assignee, as the Successful Bidder with respect to the Bushmaster brand and certain related assets; and
Sportsman’s Warehouse, Inc. as the Successful Bidder with respect to the Tapco brand.

If these bids are approved, Vista Outdoor will become an even larger player in the civilian ammunition market with the addition of Remington’s ammunition factory in Arkansas.

The other big story is that Ruger will be adding the Marlin lever action lineup of rifles to its product line. It is unknown if they will keep the old name or market them under the Ruger name.

JJE Capital is the owner of Palmetto State Armory among other companies. DPMS will be a good fit for them as will H&R in the budget category. I’m not sure of their intention for Parker which makes the reproduction Parker shotguns nor what they plan to do with suppressor maker AAC or barrel maker Stormlake.

Franklin Armory getting Bushmaster will be a good fit for them. Likewise, Sierra Bullets adding Barnes Bullets to their lineup makes sense.

Roundhill Group, LLC is a property management group out of Virginia according to a story out of New York. I’m not sure if that is the correct Roundhill as there are a number of companies by that name with various spellings. Nonetheless, they will be getting the non-Marlin firearms business which would include Remington itself and presumably Dakota Arms. The story indicates a bit of unease in Ilion, NY where the Remington factory is the largest employer in Herkimer County. The backup bidder for this part of the assets includes Century Arms. I would hate to see what they would do with Remington.

Finally, Sportsman’s Warehouse is getting Tapco. I presume they intend for this to be used to provide accessories to be sold in their chain of stores.

The Wall Street Journal does bring up an interesting point in their report on the breakup of Remington into pieces. What happens now with the Connecticut lawsuit?

The Covid-19 pandemic and civil unrest have Americans stocking up on guns and ammunition, but Remington said it was short of funds, despite having erased hundreds of millions of dollars in debt in a 2018 bankruptcy.

The company is facing a lawsuit over its marketing of the Bushmaster rifle, which was used in the December 2012 killing of 20 children and six adult school staffers at Sandy Hook Elementary School in Newtown, Conn.

The 2020 bankruptcy halted a lawsuit brought by the families of some of the Sandy Hook victims, which had been preserved in the first pass through chapter 11.

Remington hasn’t said what its drive to throw its assets on the bankruptcy auction block would mean for the Sandy Hook lawsuit or for company retirees who crowded into a session with bankruptcy administrators, asking what would become of their benefits.

Remington Selling Ammo Business To SC Company

The Wall Street Journal reported yesterday that Remington Arms has agreed to sell its ammunition business for $65 million plus assumption of debt. The buyer is JJE Capital Holdings of Columbia, SC. You may not recognize JJE Capital but you will recognize one of their biggest portfolio companies – Palmetto State Armory.

From the WSJ:

Firearms maker Remington Outdoor Co. has agreed to sell its ammunition business out of bankruptcy to South Carolina-based investment firm JJE Capital Holdings LLC for $65 million plus the assumption of liabilities, subject to better offers.

The JJE offer came in the form of a stalking-horse bid, setting a floor on the sale price for Remington’s ammunition business, which the company has been marketing while in chapter 11. Remington filed for bankruptcy protection in July and has been open to selling its ammunition and firearms operations to pay off its debt.

JJE Capital is considered a “stalking horse bidder” meaning they were given the opportunity to make the first bid. This first bid then serves as a floor for the price of that asset in bankruptcy.

According to papers filed with the bankruptcy court in Alabama, JJE Capital would get Remington’s Arkansas plant, its lease on its Utah property (Barnes Bullets), any improvements made to the Utah property, all the equipment and machinery, all the existing contracts for ammunition, and all the intellectual property. All permits for things like storm water and all special licenses from ATF and the Department of State would be transferred as allowed by law.

As noted in the Wall Street Journal report, this all is subject to both court approval and to any potentially higher bids.

H/T Peter

Remington Declares Bankruptcy…Again

Remington and its subsidiary companies declared bankruptcy for the second time in little more than two years. The Chapter 11 filing was made in US Bankruptcy Court for the Northern District of Alabama. There were separate filings for Remington Arms Company LLC, Remington Outdoor Company Inc., and Remington Arms Distribution Company LLC.

In reports prior to its actual filing for bankruptcy, it had been speculated that the Navajo Nation would be the buyer to take it out of Chapter 11. According to the investing site Seeking Alpha those talks broke down.

Remington had been searching for potential buyers and was in talks to sell itself out of bankruptcy to the Navajo Nation before negotiations collapsed in recent weeks, leaving the company without a lead bidder, or stalking horse.

I had speculated along with others that having the Navajo as the owners would put a crimp in the pending lawsuit in Connecticut over liability for the Newtown murders. This would have been due to the sovereign immunity of the Navajo Nation.

The bankruptcy filings indicate assets of between $100 million and $500 million with liabilities in the same range.

The five largest creditors are all governmental entities. They include (in order) the Pension Benefit Guaranty Corporation, the State of Arkansas, the City of Huntsville, the State of Alabama, and the State of Missouri.

This is followed by companies that make smokeless powder like St. Marks and Alliant, that provide forgings and barrels like Dasan USA, and those that supply basic materials (lead, copper, brass) like Doe Run and Eco-Bat Indiana. The only tax creditor listed was the Village of Ilion, NY which came in as the 38th largest creditor. This last bit leads me to speculate that Remington had been keeping up with its payroll, income, and excise tax payments.

Now that talks with the Navajo Nation have broken down and there is no lead bidder or stalking horse, it will be interesting to see how Remington comes out of this Chapter 11 bankruptcy. In its prior bankruptcy, I think it was a forgone conclusion that the hedge fund Cerberus would transfer ownership to investors Franklin Templeton and JP Morgan.

Here, we just don’t know. I would love to see the Navajo – or any tribe – emerge as the buyers if only so as to screw the Brady Campaign and the ambulance chasing lawyers in Connecticut. Time will tell and I’ll keep reporting on it.

How Appropriate

The McClatchy chain of newspapers is in bankruptcy. The chain includes such newspapers as the Sacremento Bee, the Miami Herald, and The State (Columbia, SC). Closer to me they own three of the ten largest newspapers in North Carolina including The Charlotte Observer and the News and Observer of Raleigh. While I can’t speak to the non-NC parts of McClatchy, their NC papers tend to be very anti-gun.

New Jersey-based Chatham Asset Management, a hedge fund, is their largest creditor and has won an auction to buy the chain. The auction results must be finalized by the bankruptcy court.

From the N&O:

“From the outset of this voluntary Chapter 11 filing, our aim was to permanently address both the company’s legacy debt and pension obligations and strengthen our balance sheet in order to provide greater certainty and stability to the wider group of our colleagues and stakeholders who benefit from a restructured McClatchy,” Craig Forman, president and CEO of McClatchy, said in a statement Sunday.

“We’re pleased that Chatham and the supportive secured first-lien creditors believe in our business and our mission and are helping to achieve these goals.”

When McClatchy, the nation’s second largest local news company, filed for Chapter 11 bankruptcy in February, its restructuring plan called for Chatham, which has been an investor since 2009, to emerge as owner. The company, whose stock had been publicly traded, would be under private ownership.

After the pandemic disrupted the economy in March, McClatchy added a second exit option, putting itself up for sale.

Chatham owns a couple of other newspaper & media companies: Canadian based Postmedia Network and American Media.

American Media was the parent company of the National Enquirer until April 2019 when it was forced to sell it by Chatham. It was erroneously reported by the News & Observer that they still owned it. Nonetheless, they retained such paragons of journalism as US Weekly, the Star, and inTouch.

As the conservative-leaning Carolina Partnership for Reform noted:

Just think… if you didn’t believe the news from these papers before, now you’ll have a reason to say why. And if you like scandal and sensation, you won’t have to go to the grocery store checkout aisle to get it.

When you consider it, the pairing of the News and Observer as a sister company to the American Media offerings is quite appropriate. While they are now piously progressive, as a student of North Carolina history, it is hard to forget their role in advancing white supremacy on behalf of the Democratic Party. Whether it was editorials attacking miscegenation or their scurrilous cartoons, the N&O (and the Charlotte Observer) was more sensational in its earlier days than even the tabloids are today.

As I said in the headline, how appropriate.

Remington Arms Eyeing Bankruptcy…Again

The Wall Street Journal reported Friday that Remington Arms is preparing to file for Chapter 11 bankruptcy again. If so, this will be the second time in about two years that they’ve sought the protection of the bankruptcy court.

As Michael Bane pointed out on Facebook, Remington had already shut down their AR brands and has missed out on the boom due to COVID-19. Moreover, pistols are selling like hotcakes – except for 1911s. Again, Remington missed out.

Now here is where the potential bankruptcy gets interesting. The probably lead bidder for Remington is the Navajo Nation.

From the WSJ:

The bankruptcy filing could come within days as the gun maker makes preparations for the Navajo Nation to serve as the lead bidder to purchase Remington’s assets out of chapter 11, these people said. Founded in 1816, Remington’s namesake weapons are mainstays in hunting, shooting sports, law enforcement and the military.

The Navajo Nation—a territory with roughly 175,000 people across parts of Utah, Arizona, New Mexico—could finalize a bid for Remington as soon as Friday, one of the people said. Any bid for the company would be subject to competing offers and require bankruptcy-court approval.

The timetable could be pushed back, and an offer from the Navajo Nation isn’t guaranteed to materialize, people familiar with the matter said.

The Navajo Nation, which explored buying Remington as far back as 2018, owns a set of business enterprises in industries including energy, transportation, and utilities. In 2019, a business owned by Navajo Nation purchased coal company Cloud Peak Energy’s mining assets out of bankruptcy.

What makes ownership by the Navajo Nation particularly interesting is that they have sovereign immunity. This is especially true in light of the litigation in Connecticut over Remington’s supposed liability for the Newtown murders.

Jim Shepherd of The Shooting Wire had some very astute comments on this issue today.

So what would a Navajo acquisition look like?

With their business acumen and consultants, it probably wouldn’t look very different from most other offers price-wise. But the Nation’s unique status would introduce two variables: sovereign immunity and tribal law.

Interpreting what sovereign immunity really means, especially in a business negotiation, is an assignment I’m not equipped to complete. It is a complicated relationship between the various tribes and the federal government. While their businesses generally operate under the U.S. tax codes including taxes, there are some very notable exceptions.

Tribes under the terms of sovereign immunity are shielded from litigation much the same as states. That protection “usually extends to suits arising from a tribe’s ‘off-reservation’ or commercial activities, including the activities of an off-reservation tribal casino.”

With regard to business endeavors, federal courts, according to the American Bar Association, generally do not distinguish between “governmental” and “commercial” activities. “Numerous courts,” says the ABA in Doing Business in Indian Country: A Primer “have thus held that tribal sovereign immunity extends to tribal casinos, businesses, schools and corporations (my emphasis).”

While it’s not absolute, there’s a “strong presumption” against any waiver of that immunity, and it can only be abrogated otherwise by an “unequivocal expression” of Congress.

Tribal officials and employees acting in their official capacities and within the scope of their employment are also shielded from damage suits and requests for injunctive relief. They’re also immune from subpoena enforcement to “compel production of tribal witnesses or documents.”

Think what having tribal sovereign immunity would do for a firearms manufacturer. They wouldn’t have to depend upon the Protection of Lawful Commerce in Arms Act which a President Biden and a Democrat-run Congress have promised to repeal. They could look both Brady Legal Project attorneys and ambulance chasing plaintiffs attorneys in the face and say “eff off.” Moreover, could you really imagine any Congress, Republican or Democrat majority, in these days and times trying to take immunity away from tribes?

2020 which was already an “interesting” year just got more interesting. I am anxious to see how this all plays out.

Remington Files Bankruptcy On Sunday

Remington Outdoor Company filed its long awaited bankruptcy petition with the US Bankruptcy Court for Delaware on Sunday. The agreement to do the pre-packaged Chapter 11 filing was reached with creditors in February. In the time following that agreement, Remington entered into a number of “material definitive agreements” with the various creditors.

According to Reuters, Cerberus will lose all their ownership rights in the bankruptcy. The equity in the company will now go to the creditors.

The creditors inked the debt-cutting deal prior to the Parkland shooting, and it is unclear if any have exited. The restructuring support agreement allows creditors to sell their holdings, but the buyer is bound by the deal.

One investor told IFR, a Thomson Reuters news provider, that his firm had contemplated buying the Remington loans that will be exchanged into equity, which were offered at as low as 25 cents on the dollar.

“We bowed out because we were uncomfortable,” he said.

After a Remington Bushmaster rifle was used in the Sandy Hook elementary school shooting in Connecticut in 2012 that killed 20 children and six adults, Cerberus tried unsuccessfully to sell Remington, then known as Freedom Group.

Katie-Mesner Hage, an attorney representing Sandy Hook families in a lawsuit against Remington, said in a prepared statement that she did not expect the gunmaker’s bankruptcy would affect their case.

The lawsuit referred to in the last paragraph is now before the Connecticut Supreme Court on appeal. The case was dismissed in state superior court as the judge decided that Bushmaster was protected by the Protection of Lawful Commerce in Arms Act as it was not a case of negligent entrustment which is an exception to the PLCAA.

Here is the bankrupt petition listing creditors and the CFO’s statement. Reuters notes that the court action is expected to go quickly and the restructured company could be out of bankruptcy by May.

Reuters: Remington Seeks Financing To File For Bankruptcy

Reuters reported yesterday that Remington Outdoor Company is in search of financing that would allow it to file for bankruptcy. They have reached out to a number of banks and credit investment funds.

The move comes as Remington reached a forbearance agreement with its creditors this week following a missed coupon payment on its debt, the sources said. The company has been working with investment bank Lazard Ltd (LAZ.N) on options to restructure its $950 million debt pile, Reuters reported last month.

Remington is seeking debtor-in-possession financing that will allow it to fund is operations once it files for bankruptcy, the sources said. The size of the financing and timing of Remington’s bankruptcy plans could not be learned.

Some potential financing sources, including credit funds and banks, have balked at coming to Remington’s aid because of the reputation risk associated with such a move, according to the sources.

In addition to sales being reportedly down 27% for the first three quarters of 2017, Remington faces a $550 million term loan that comes due in 2019 along with another $250 million in bonds that mature in 2020.

In other words, Remington is facing a perfect storm.