Gunmaker Remington Outdoor – which has been making crappy guns for years, may become the first American gun manufacturer to go bankrupt amid a sharp decline in gun sales after President Trump’s election.
The NICS Firearm Checks database has recorded its largest year-to-year drop in history:
Credit rating agency S&P cut the corporate credit of the country’s second-largest U.S. gunmaker two full notches by from CCC+ to CCC- as a “backlog of unsold, unwanted firearms will force Remington to operate at a loss and pressure the company’s sales and profitability through early 2018,” according to Philly.com.
…a backlog of unsold, unwanted firearms will force Remington to operate at a loss and “pressure the company’s sales and profitability at least through early 2018, resulting in insufficient cash flow for debt service and fixed charges,” unless Remington gives up cash to pay for ongoing operations.
S&P expects “a heightened risk of a restructuring” of Remington’s $575 million senior secured loan and asset-based lending facility, which it is supposed to pay back in 2019.
If Remington defaults on its payments, based on the company’s current value, S&P expects first-lien creditors may receive around 35 cents back from every dollar they have lent or invested. Lower-rated creditors would get back less, or nothing. –Philly.com
While Remington isn’t public, is this a canary in the coal mine for other gun manufacturers?
Both American Outdoor Brands Corporation (formerly Smith & Wesson) and Ruger have fallen since the election
Check out the sharply declining revenues, courtesy of Exodus:
While Remington’s default isn’t “a virtual certainty” yet, it’s obvious that the industry is under immense pressure now that a pro-2nd Amendment President is in the White House.If you enjoy the content at iBankCoin, please follow us on Twitter