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.

Remington Plans To Appeal Connecticut Supreme Court Ruling To SCOTUS

The Connecticut Supreme Court ruled on March 14th that the Protection of Lawful Commerce in Arms Act did not protect Remington and its fellow defendants in a case brought by families of some of the Newtown murder victims. The split decision allowed the case to go back to the trial court level for adjudication. Given the strong dissent in the case and the way the majority made up a rationale out of whole cloth to support their decision, it was only a matter of time before an appeal was filed with the United States Supreme Court.

Remington filed a motion with the Connecticut Supreme Court yesterday requesting a stay in the decision as they plan to appeal to the SCOTUS.

Remington is filing a Petition for Certiorari in the United States Supreme Court in
accordance with the applicable Rules of the United States Supreme Court. The basis
for jurisdiction in the Supreme Court is this Court’s decision on an important federal
question that conflicts with a decision of a United States court of appeals. U.S. Sup. Ct.
R. 10. Specifically, Remington will ask the United States Supreme Court to consider
and decide whether CUTPA is the type of statute Congress intended to serve as a “predicate statute” under § 7903(5)(A)(iii) of the PLCAA, a violation of which may
deprive firearm manufacturers and sellers threshold immunity against being sued. See
15 U.S.C. § 7902(a) (“A qualified civil liability action may not be brought in any Federal
or State court.”). As this Court recognized, “courts that have construed the predicate
exception are divided” on whether Congress intended for violation of statutes, like
CUTPA, to serve as an exception to PLCAA immunity. Soto, 331 Conn. at 136.

The motion goes on to give a legal rationale for the issuance of a stay.

The Court should stay proceedings pending the United States Supreme Court’s
decision to either deny Remington’s Petition for Certiorari or its decision on the merits of
the case. Practice Book § 71-7 provides:

When a case has gone to judgment in the state Supreme Court and
a party to the action wishes to obtain a stay of execution pending a
decision in the case by the United States Supreme Court, that party
shall, within twenty days of the judgment, file a motion for stay with
the appellate clerk directed to the state Supreme Court. The filing of
the motion shall operate as a stay pending the state Supreme
Court’s decision thereon.

If proceedings are not stayed and Remington is required to undergo the costly
and time-consuming burdens of litigation, including further discovery, motion practice
and possibly trial, it will irreparably lose the intended benefit of threshold PLCAA
immunity from suit. The United States Supreme Court has consistently recognized that
“[u]ntil … threshold immunity is resolved, discovery should not be allowed.” Harlow v.
Fitzgerald, 457 U.S. 800, 818 (1982).

According to the Associated Press, Remington has until June to file the actual petition for a writ of certiorari. The same article quotes the attorney for the plaintiffs as saying, “is a matter of law for the state of Connecticut.” Given that the case revolved around the supremacy of Federal law in what is arguably a Federal matter, this is a case that should be heard by the SCOTUS. That is, if they want to preserve the intent of Congress and the Supremacy Clause of the US Constitution.

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.

Remington Outdoor Gets A New CEO

Remington Outdoor Company announced that they had appointed Anthony Acitelli as their new CEO. Mr. Acitelli was formerly the CEO of Taurus Holdings. He replaces James “Marco” Marcotuli who stepped down at the end of August after little more than two years in the position.

From their press release:

Huntsville, AL – Remington Outdoor Company (“ROC”), one of the world’s leading designers and manufacturers of firearms, ammunition, and related products, today announced Remington’s Board of Directors has unanimously elected Anthony Acitelli Chief Executive Officer (CEO) and to the Board of Directors.

Mr. Acitelli is a respected industry veteran with twenty plus years of leadership experience. In addition to successfully leading sales and marketing organizations, Mr. Acitelli most recently served as CEO of Taurus Holdings. Mr. Acitelli holds a Master of Business Administration from Thunderbird Global School of Management and a bachelor’s degree in Finance from the University of South Florida.

“Anthony’s experience as an industry insider with both customers and consumers will strengthen Remington’s presence in the market place.” said Jim Geisler, Executive Chairman of the Board. “As our industry continues to experience changes in demand and in consumers buying preferences, Remington will continue to innovate providing the best products and experiences to our customers. There can be no other way to build a good 2018 and beyond.”

Mr. Acitelli stated, “I am truly humbled and honored to become a part of America’s most iconic brands within the hunting and shooting industry. I look forward to the challenges ahead, while forging a course for the future with innovation and vision. We owe it to those that came before us and to those that will follow.”

I’m going to go out on a limb here. While Taurus may not be the most highly respected firearm company in the United States, it is a firearms company. I think it was past time for Remington to hire a CEO who actually had been in the firearms’ business as opposed to making cars or investment banking.

Now if Remington had really been thinking out of the box they would have mortgaged heaven and earth, got down on their knees, said their prayers, and begged Mike Fifer to come out of retirement. I’m not saying Fifer could have turned Remington around immediately but the man knows how to run a profitable gun company.