A decline in firearm sales under the Trump administration is heaving gunmakers like Remington into financial turmoil. The centuries-old centerpiece of American rifle manufacturing filed for Chapter 11 bankruptcy earlier in the week, leaving analysts to ponder the reasons for its sudden failure.
Just days after the announcement, a judge approved a company request to receive additional funding. Some $75 million in loans will be sent to Remington, allowing production to continue as its attorneys argue down its financial obligations in court.
The massive amount constitutes but a portion of the $338 million Remington is hoping to borrow by April’s end. Tuesday’s decision, explains Debtwire legal analyst Sarah Foss, is an “interim amount” intended to keep the manufacturer in business until it can be approved for a larger sum.
The company has already received hundreds of millions in financial commitments from prospective lenders – but the process wasn’t easy for Remington and its executives. In the months leading up to its Chapter 11 filing, reports Reuters, corporate bankers from Lazard Ltd approached dozens of potential lenders.
“The vast majority of lenders contacted, however, indicated they were reluctant to provide financing to firearms manufacturers,” said Lazard banker Ari Leftkovits.
Surprisingly few were willing to offer capital to a company which has been supplying firearms to Americans since the days of the Western frontier. Most of the lenders who eventually extended commitments had been financially supporting Remington since before its current financial crisis.
Without the funds, writes Reuters, Remington may have been forced to halt production and cease operations entirely. Any investment from banks and lenders would have crashed entirely.
But Remington is hardly a unique case – some of the biggest players in the firearms game are gasping for air. The reason, analysts speculate, has less to do with political debate on gun control than the pacification of manufacturers’ best customers.
The Obama administration, writes CNN, spurred record gun sales. For eight years, conservative fears of a presidential gun grab prompted Second Amendment fundamentalists to purchase rifles, pistols and bullets in bulk.
While Obama was poised to vacate the White House, many Americans believed Hillary Clinton election inevitable. Even as Donald Trump’s popularity began expanding, few firearms executives began production in 2016 with the expectation he might eventually occupy the Oval Office.
Remington and its cohorts ramped up production as the year progressed, expecting a Clinton candidacy to further fears of a post-inauguration gun grab.
But the election of Donald Trump reversed the dynamic drastically. Worried gun owners could breathe easy for the first time in eight years – leaving manufacturers with a burgeoning surplus of weapons, decreased demand, and soaring debt.
Ironically, one of Remington’s biggest threats today doesn’t come from an unfriendly president but rather retailers bowing in the face of public pressure. In court, the company justified its requests from lenders as a necessary response to the likes of Walmart and Dick’s Sporting Goods emplacing restrictions on gun sales.
Sources
A $75 Million Lifeline Means Bankrupt Remington Can Keep Making Guns For Now
Remington gets $75 million lifeline
Remington Has a $500 Million Question Hanging Over Its Bankruptcy
Remington, one of America’s oldest gun makers, files for bankruptcy
Join the conversation!