Daily News: February 13, 2018

BofA Supports Remington Restructuring

Remington Outdoor reached a restructuring support agreement (RSA) with creditors holding a majority of the FGI Operating Company term loans due in 2019 and 7.875% senior secured notes due in 2020.

According to an SEC filing, Bank of America, as administrative agent, reached a forbearance agreement with the company for the term B loans.

Reuters reported that Cerberus Capital Management will lose ownership of the 200-year old arms and ammunition company as a result of Remington’s financial woes. The company’s creditors, which include Franklin Templeton Investments and JPMorgan Asset Management, will exchange their debt holdings for equity in the company.

Reuters added that Cerberus had been trying to sell Remington since the Sandy Hook Elementary School shooting, which had prompted law suits against the company. One of its Bushmaster rifles was used in the shooting.

The RSA provides for the reduction of approximately $700 million of Remington’s consolidated outstanding indebtedness and the contribution of $145 million of new capital into Remington’s operating subsidiaries, markedly strengthening the company’s consolidated liquidity, balance sheet and long-term competitiveness.

The RSA, subject to certain conditions, represents the commitment of the company and consenting creditors to support a comprehensive restructuring of Remington’s existing funded indebtedness. The balance sheet restructuring will be effectuated through a pre-packaged joint plan of reorganization to be filed in the U.S. Bankruptcy Court for the District of Delaware in connection with the company’s filing of voluntary petitions for reorganization under Chapter 11.

Remington’s business operations will continue to operate in the normal course and will not be disrupted by the restructuring process. Payments to trade partners, employee wages and other benefits, support for customers, and any ongoing services to consumers will continue without interruption.

Remington Executive Chairman Jim Geisler, said, “Since its founding, Remington has been a uniquely American company and brand. Our longevity is owed to generations of loyal customers and hard-working employees who met challenges and delivered results. Difficult industry conditions make today’s agreement prudent. I am confident this regrouping ensures that Remington will continue as both a strong company and an indelible part of our national heritage.”

Key elements of the RSA and balance sheet restructuring also include:

  • All existing unsecured and priority claims of Remington Outdoor Company and each of its subsidiaries (other than funded debt claims) will be unimpaired, including trade payables.
  • With the consent of a majority of the holders of the term loans and the third lien notes, Remington will provide a $45 million delayed draw first-out first lien term loan to FGI OpCo. This facility will roll into a debtor-in-possession term loan upon the Chapter 11 filing.
  • The consenting creditors will provide a $100 million debtor-in-possession term loan to fund the company’s Chapter 11 cases. Upon exiting bankruptcy, the DIP term loan will be converted into an exit term loan.
  • The company will arrange a new asset-based loan facility at emergence, the proceeds of which will refinance the existing ABL facility in full.
  • The term loan lenders will equitize their claims and receive 82.5% of the equity in reorganized Remington. These lenders will also receive their pro rata share of $2.67 million in cash at emergence.
  • The third lien noteholders will receive 17.5% of the equity in reorganized Remington through the equitization of the ROC DIP term loan, and four-year warrants for 15% of the equity in reorganized Remington at a strike price to be derived at emergence based on a $700 million enterprise value. The third lien noteholders will also receive their pro rata share of the remaining cash at Remington Outdoor.

Remington’s legal counsel is Milbank, Tweed, Hadley & McCloy, its investment banker is Lazard and its financial advisor is Alvarez & Marsal Capital Partners. The term loan lenders’ legal counsel is O’Melveny & Myers, and their investment banker is Ducera Partners. The third lien noteholders’ counsel is Willkie Farr & Gallagher, and their investment banker is Perella Weinberg Partners.