Not a mystery: Private equity firm bought them out with borrowed money, raided their resources to enrich themselves, then left Remington to rot. It is a common story now. The private equity firm makes a bunch of money and people are jobless.
> Because private-equity firms appear frequently as villains in the press, many people assume that they cater mostly to the superrich, earning high returns on investments for billionaire clients. They do. But by far the most important piece of their business — 48 percent, according to the data-analytics firm Preqin — is investing capital for American pension funds.<p>This doesn't get mentioned often enough when talking about the "1-percenters" and the wealth gap in Western countries, i.e. that most of the capital behind all of the current economic and social system is directly or indirectly held by part of the general populace itself.<p>The issue is of course that the other part of the populace (generally speaking people under 35 who cannot put money towards their retirement funds or who can only get temp jobs) are not part of this financial arrangement and, as it so happens, are also some of the worst affected by the current economic set-up (those temp jobs I was mentioning are not as great as the normal full-time jobs held by people whose pension funds are managed by the companies investing in Cerberus).<p>Afaik almost no politician has focused on this social and economical contradiction, if I may call it this way, some of them are putting whole of the blame on the 1-percenters, some of them are choosing to ignore it all together, but almost no-one has actually looked at the real numbers. And the real numbers tell the story of a society divided in two, a part that will manage to enjoy its pension and the other part that has no clue how will pay for its old age.
There's a certain amount of poetic justice here for Remington, seeing as how they acquired Marlin and then fired all their expertise, completely ruining the brand. Good riddance.
I especially liked this bit
"The pension fund for the Boston-area public water utility invests in Cerberus. The California State Teachers’ Retirement System, CalSTRS, is a Cerberus client, as is a pension fund for the Presbyterian Church as well as many university endowments, sovereign wealth funds and philanthropic foundations."
Made me chuckle a bit inside, as I know a couple people who are less on the side of guns, as they are more on the side of teaching, who would be dying inside knowing their retirement money is used like this.
"Financial engineers" aren't interested in building a sustainable business; they want to play a game cleverly, make a cash-grab, jump ship, and leave thousands dealing with the fallout. It's a similar short-term strategy to that taken by many SV founders who build a company only to sell it, though obviously the latter don't cause nearly the same degree of harm to society. But they still pass on opportunities to create actual value and jobs, in favor of making a quick buck and moving on to the next exploit. It's the mindset of locusts.
Remington's product quality went way south soon after the acquisition and hasn't really recovered. When you have a very traditional market for your products (many firearms designs are decades old), those products are expensive, and potentially designed to save your life or at minimum contain tens of thousands of PSI inches from your face, losing your reputation for quality is a death sentence, and due to the capital costs, you're unlikely to be able to squeeze out cash by burning your reputation.
> A plunge in NIC checks foreshadows a corresponding plunge in gun sales<p>I'm curious about this statement. NIC checks are, as the name implies, instant. They happen upon transfer of ownership of a firearm from an FFL dealer. So I'm not sure how they 'foreshadow' sales, more likely they mirror sales. In fact, when you purchase a gun online, the sale occurs before the check...
This is not an uncommon story for firearm manufacturers unfortunately. Tooling costs are high, sales hard to predict, and designs can fail easily. Ian McCollum of Forgotten Weapons has done a lot of videos on this topic.
The theory behind this is, a stable company should have plenty of debt, as it can easily pay it off (because it's stable), and is generally cheaper than equity.<p>A company should also have only as much cash as it needs, else management will waste it<p>So a private equity company sees a company like Remington, with too much cash and not enough debt. It borrows a lot, buys it, and minimizes cash reserves. This tends to increase the market cap substantially<p>However, this obviously has some downsides, if you don't get the default risks just right...
This is sad to know. Back in India we owned a Remington rifle which was like 80 years old and still worked really well. No Indian made rifle could match its reliability.
The part I don't get is how Cerberus made money. It seems like it was a zero-sum for Cerberus. They loaned the holding company 225M, and presumably got that money back through the holding buying the stock back from Cerberus after the holding sold the 11% corp. bonds.<p>Is it that between when the holding bought the stock back from Cerberus and Cerberus (via the holding) sold the bonds Cerberus had control of Remington (via the holding stock) and therefore effectively sold Remington's assets, paying themselves through the holding's stock. Then, when Remington was valueless, the holding bought the stocks back from Cerberus as if Remington still had value leaving the bond holders hanging?<p>That's such a dumb scam. Why would anyone buy those bonds, and how was Remington able to get a loan to buy the holding's stock if Cerberus raided it?
These private equity scams seem to revolve around borrowing money, transferring the debt to a separate legal entity that then declares bankruptcy, and pocketing the money. If that’s true, then it would seem that creditors (and AL taxpayers in this case) end up holding the bag. How are savvy lenders falling for this?
At this point, I feel most employees of a business that's up for sale should just put their foot down and say no to selling the company to any private equity firm.<p>The owner can say, hey I worked for this and I need to exit with a plan.<p>Well, the employees can say we worked for this and we need to make sure we will have our jobs in 5 - 10 years.<p>I am working in a company that used to be privately owned, and was sold to a PE. It happened before I joined. The ones who are still here tell me the night and day difference in how the employees are treated before and after the sale. The treatment I'm talking about is how the employees are compensated.
the finitude of being<p>Companies are man made so the have a limited live span. There is no exception, every man made organisation will end. While this is sad for every single case, the finitnes is a good thing at all.<p>Thinking on finitnes of companies, stock market indexes have a mathematical limit.
Remington just doesn’t have that many interesting guns. There are a ton of firearms manufacturers in the last 20 years. I’m guessing the AR-15 market alone is billions in revenue.