U.S. based Remington Outdoor Company Inc., which is one of the largest firearms makers in the U.S., announced on Monday it reached an agreement with its creditors to file Chapter 11 bankruptcy protection to slash its debt load of more than $950 million.
The planned bankruptcy follows a drop in sales for the gun maker, in part due to fewer fears that firearms will be heavily regulated by the government.
Current U.S. President Donald Trump said he would never infringe on the people’s rights to keep and bear arms. American Outdoor Brands going back to the election victory of Trump in November of 2016 has lost close to two thirds of its market value in stock, while competitor Sturm Ruger & Company had dropped 25%. In comparison, the S&P 500 increased over that same period by 25%.
Remington announced that it would receive bankruptcy financing of $145 million that would fund it through its process of Chapter 11. Remington is planning to file for bankruptcy in Delaware seeking to write off debt of more than $700 million.
Cerberus Capital Management, which controls Remington, will lose it ownership of the business due to the bankruptcy. The creditors of the company, which included JP Morgan Asset Management and Franklin Templeton Investments, will exchange the debt they hold for company equity.
The business operations which would include employee benefits and wages, as well as payment to creditors will continue through the process of bankruptcy, said the company.
Remington CEO Anthony Acitelli in a prepared statement said the company has an outstanding collection of products and brands, unqualified support from a countywide vibrant community in the industry, and a powerful and deep culture.
Remington has been abandoned by some investors after a Bushmaster rifle it makes was used in the 2012 Sand Hook, Connecticut elementary school shooting that killed 26, including 20 children.
Following the shooting, Cerberus was unsuccessful in his attempt to sell the firearms maker, at that time called Freedom Group, after receiving pressure from some investors in its equity fund.
Cerberus CEO Stephen Feinberg considered at that time a bid for Remington as a way to increase interest in the firearms maker from other possible buyers. In 2015, the private equity company offered a way to for its fund investors that wanted out of Remington, to sell their shares back to the company.
The families of the Sandy Hook victims sued Remington as well, with that case still ongoing. Sales at Remington plunged 27% for the first nine months during 2017, which resulted in an operating loss of $28 million.