Remington Outdoor Company Inc., which is one of the largest makers of firearms in the U.S., is working with Lazard Ltd, an investment bank, on options for restructuring its debt of $950 million, said people close to the matter on Friday.
Remington, which is still privately held, has been facing doubts about the ability of refinancing its large debt load in 2018 amidst a period of sluggish sales. The firearms maker was abandoned by some investors after a Bushmaster rifle of it was used during the Sandy Hook elementary school massacre in 2012 where 20 children and six adults were killed.
An analyst on Wall Street said he was concerned that Remington could not refinance debt that is coming due during April of 2019 given the weak operating performance it has and its high financial leverage.
Remington has been working together with Lazard examining a host of options to increase its finances, and no certainty exists about the course of action that will be chosen by the company, said sources, who asked to remain anonymous due to the matter being confidential.
Remington has not released a statement about the situation, while Cerberus Capital Management declined to make a comment.
Cerberus, following the shooting, attempted unsuccessfully to sell the gun maker, then known by the name Freedom Group, after it was put under heavy pressure from some of its investors in the private equity fund.
Cerberus CEO Stephen Feinberg considered as well a bid for Remington to increase interest in the firearms maker from other possible purchasers. In 2015, Cerberus made an offer to fund investors that wanted to sell Remington, to sell their shares back to the business.
The victim’s families from the Sandy Hook shooting sued Remington as well. That case has not been resolved.
The capital structure of Remington is unstainable at the current time given the weak operating performance it has shown, significant volatility in demand for guns and ammunition, and a debt load that is very high, said an analyst on Wall Street.
Sales of the gun maker have dropped partly due to receding fears of a government regulation on guns, according to the analyst. President Donald Trump has said he would never infringe of the people’s right to keep as well as bear arms per the U.S. Constitution.
The National Rifle Association has a very strong lobbying presence in Washington and while it has helped to keep any new regulations from being passed, it has helped lower fears of them and caused gun demand to drop.