Remington bankruptcy is latest hit for Cerberus Capital

Stephen Feinberg hasn’t had a happy time playing with guns.

The long-anticipated Chapter 11 filing of Remington Outdoor, owned by Feinberg’s Cerberus Capital, is just the latest bit of trouble the investor has had in the sector.

Cerberus-owned military facilities provider IAP Worldwide Services in 2014 defaulted on its debt and creditors took over the business. The private equity powerhouse still owns DynCorp International that it bought in a $1.7 billion buyout — but it too is struggling.

Earlier this month, DynCorp, which provides aviation logistics for the US military, said it was laying off 229 workers after losing a $10 billion contract with the State Department’s International Narcotics and Law Enforcement Affairs unit.

As for Remington, the oldest gunmaker in the US, it was done in by lackluster sales, heavy debt tied to a 2007 leveraged buyout and lawsuits filed in the wake of the Sandy Hook school shooting.

A Remington-made Bushmaster rifle was used in that Newtown, Conn., assault.

With the Chapter 11 filing, Remington is expected to hand the keys over to creditors, including Franklin Resources and JPMorgan Chase. These unexpected owners of the company will likely find it hard to attract buyers, according to sources who buy and sell assets in the sector.

One partner at a private equity firm that has considered buying gun makers said he could be tempted to buy Remington at a bargain price — but likely will not be able to persuade his fund’s investors to make an investment.

State pensions and others do not want to be associated with the maker of Bushmaster assault rifles, he said.

One possible solution would be to separate Remington’s profitable ammunition business from the rest of its assets, the PE partner said. At this stage, the Bushmaster business is worthless, he said.

Remington’s financial issues are also tied to the difficulty the company has had running its Huntsville, Ala., manufacturing plant that opened in 2014, the partner noted.

A likely buyer for Remington is someone who invests family money and does not need to answer to investors, the partner said.