Wait are we talking about Freedom Group, owned by Cerberus Capital Management?I love the idea that an Indian tribe would purchase Remington, which probably made many of the rifles used against them in the 1800's. I'm pretty sure I saw a special on a corporate takeover of a gun maker, where the corp. used the gunmaker's credit to run up huge debts while it gutted the company, then the formerly successful company went bankrupt. Wasn't sure if it was Remington? America's oldest firearm manufacturer, gets destroyed by a greedy corporation...
How awesome would it be if they changed the logo to a Navajo warrior on horseback gunning down settlers?
That sounds familiar. Was it a Netflix special or something? I barely remember. I do remember the corporation got tax concessions from a southern state, promised living wage jobs in an area with high poverty, never delivered, and bled the gun company dry until it went bankrupt with some kind of loan and debt scheme.Wait are we talking about Freedom Group, owned by Cerberus Capital Management?
I don't think so... I don't do the Netflix thing. This is me spitballing, but Cerberus Capital Management is an equity firm that buys distressed companies. CCM gets majority shares of the company (or group), loads them up with further debt, proceed to gut the company to pay back said debt, and then dumps the shares of what appears to be a healthy company.That sounds familiar. Was it a Netflix special or something? I barely remember. I do remember the corporation got tax concessions from a southern state, promised living wage jobs in an area with high poverty, never delivered, and bled the gun company dry until it went bankrupt with some kind of loan and debt scheme.
Something tells me this is going to end badly. Not trying to sound like a dick, but tribal leadership within a lot of American Indian Groups is very reminiscent of Soviet kleptocracy. It's that bad.The Navajo buying Remington....am I the only one who wants to see Jack Daniels sold to the Cherokee or Lakota?
I don't think vulture capitalists put them a billion dollars in debt, got them sued by Sandy Hook parents, or created the laws that forced an expensive relocation from New York to Alabama, though.Yep. Remington got absolutely gutted by vulture capitalists who hollowed out the company and then spit out its desiccated husk. It’s pretty awful.
Freedom Group had already been acquired by Cerberus Capitol before that other stuff went down. The events that transpired were the final nails on the coffin.I don't think vulture capitalists put them a billion dollars in debt, got them sued by Sandy Hook parents, or created the laws that forced an expensive relocation from New York to Alabama, though.
You're right about the last two things, but Cerebrus Group actually did leverage a bunch of Remington's assets to borrow a ton of money to bail out a holding company that they (Cerebrus) had created. I mean, think about it: how does a gun company acquire almost a billion dollars in debt during the Obama administration?I don't think vulture capitalists put them a billion dollars in debt, got them sued by Sandy Hook parents, or created the laws that forced an expensive relocation from New York to Alabama, though.
That's not to say that Remington didn't have problems before the acquisition, but I really think that they could've survived if Cerebrus hadn't done the ol' Private Equity shuffle on them.In order to buy Remington, Cerberus, as most private-equity firms would, created a new entity, a holding company. Instead of Cerberus buying a gun company, Cerberus put money into the holding company, and the holding company bought Remington. The entities were related but — and this was crucial — each could borrow money independently. In 2010, Cerberus had the holding company borrow $225 million from an undisclosed group of lenders, most likely hedge funds. Because this loan was risky — the lenders would be paid only if Remington made a lot of money or was sold — the holding company offered a generous interest rate of around 11 percent, much higher than a typical corporate loan. When the interest payments were due, the holding company paid them not in cash but with paid-in-kind notes, that is, with more debt. These are known as PIK notes.
The holding company now had $225 million in borrowed cash. Cerberus, meanwhile, owned most of the shares of the holding company’s stock, basically slips of paper they acquired when they created the holding company. The handoff happened next: The holding company spent most of the $225 million buying back its own stock, effectively transferring all the borrowed cash to Cerberus. Cerberus would keep that money no matter what. Meanwhile Remington continued rolling along as though nothing had happened, because Remington itself was not responsible for the holding company’s debt. Remington was just an “operating company” that the holding company owned, something that allowed the holding company to borrow money, the way you would take a necklace to a pawnshop. These were garden-variety maneuvers in a private-equity buyout. In the trade, this is called “financial engineering.” People get degrees in it.
In April 2012, Cerberus did something fateful, which probably seemed smart at the time. It had Remington borrow hundreds of millions of dollars and use it to buy the holding company’s debt, effectively transferring responsibility for the principal and the interest payments onto Remington. America’s oldest gun company now owed the money that Cerberus had used to pay itself back for having bought the company in the first place. There were plenty of sensible reasons to do this. Gun sales were high, and the debt that Remington took out was cheaper to service than the paid-in-kind debt.
But there was a catch. Because the operating company borrowed the money with a normal loan — and not with PIK notes — interest payments were required in cash. Suddenly Remington was carrying hundreds of millions of dollars in debt that, if it could not be paid, would cause the business to go bankrupt.
If it helps, I read about it somewhere else. I lurk on alot of other forums. Only reason I know anything about this is Remington's slow demise has allowed new players to expand their footprint in the firearms industry.^Yeah, that sounds about right. I swear there was a special on it somewhere, maybe and American Greed episode or a YouTube video or something.
Indeed. Hoping the state doesn't flip Blue though. That last round of gun control discussion being pushed really illuminated how tenuous the hold on power is by the AZ GOP. Too many Californians moving in and trying to make our state like their failed one..Come to AZ where the private gun sales are plentiful.