2017 has seen the biggest drop in American firearms sales in history.
After 8 years of almost incessant rises in NICS Firearms Checks (a proxy for ‘legal’ arms sales) under President Obama…
2017 has seen a considerable drop (year-to-date) – the biggest on NICS records…
This sudden drop in demand after President Trump’s election has meant Remington Outdoor, the second-largest U.S. gunmaker, has suffered a “rapid” and “sharp” deterioration in sales and a similar drop in profits since January, and faces “continued softness in consumer demand for firearms,” according to credit analysts at Standard & Poor’s Global Ratings.
As Philly.com’s Joseph DiStefano reports, S&P cut the company’s corporate credit rating – already at a junk-bond-level CCC+ – two full notches, 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 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.
While the report said that default is not yet “a virtual certainty,” judging by the collapse in Remington’s bond prices this week… the market is pretty sure.
And while Remington is not public, it is not alone in pain as shown below…
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