Monday, June 29, 2020

Reports: Navajo Nation takes second shot at acquiring firearms maker Remington

By Native News Online Staff - June 29, 2020 at 03:48PM

Courtesy photo.

The business investment arm of the Navajo Nation reportedly is taking another run at acquiring the assets of legacy firearms manufacturer Remington Arms Co.

According to multiple media reports, Madison, N.C.-based Remington Arms Co. LLC is preparing to file for Chapter 11 bankruptcy as early as this week and is working with Navajo Nation to be the main bidder for the company’s assets. 

The Wall Street Journal reported Friday that Navajo Nation’s bid would be subject to other offers for the company, as well as approval by the U.S. Bankruptcy Court. 

Details of the tribe’s bid remain unknown. The Navajo Nation Business and Finance Committee held a special meeting this month and tabled a resolution for a direct equity investment of “up to $300 million” in an unnamed company, which it only described as “a non-native owned nationally recognized manufacturing entity that enjoys worldwide brand recognition.”

The tribe noted that it had signed a nondisclosure agreement with the company as part of its “due diligence and negotiations” concerning the investment. 

According to a draft of the resolution: “The Navajo Nation Investment Committee has reviewed the in-depth financial analysis and due diligence of such investment from the Navajo Nation’s Master Trust Fund for the acquisition of the company…”

The resolution also notes that the tribe expects the investment to generate a return that will be “no less than the five (5) year average return rate of the Master Trust Portfolio,” which as of March 31 was 4.48 percent.

For Remington, a new filing would mark the second time the company has used the bankruptcy process to address financial issues. The company in 2018 trimmed $775 million in debt through a Chapter 11 bankruptcy filing, but it continues to face high interest costs, operational challenges and litigation costs stemming from the use of Remington’s products in previous mass shootings, the Wall Street Journal reported. 

Navajo Nation made a previous offer to acquire Remington in 2018, just after the company exited from the Chapter 11 bankruptcy process in which the previous owner, private equity firm Cerberus Capital Management, transferred ownership of the company to creditors, including investment holding company Franklin Templeton Investments and JP Morgan Chase Co. 

In May 2018, Navajo Nation reportedly submitted a cash offer to buy Remington for $475 million to $525 million, with a plan to reshape the company’s business model away from consumer firearms and instead focus on police and military contracts, for which the tribe could use minority business set asides to its advantage, according to a report at the time in the New York Times

With the previous proposed deal, the Navajo-Hopi Observer reported on some controversy stemming from the bid after senior leadership within the tribe said they were not briefed on the plans beforehand and noted that the bid did not follow protocols spelled out in tribal law. 

According to a Navajo Times report on Sunday, Navajo Nation President Jonathan Nez demanded tribal leaders address renewed concerns about a lack of transparency involving the currently proposed deal. 

“Once again, the Navajo people demand that the committees who are discussing this proposal do so openly, and not in executive session, because it is the Navajo people’s money,” Nez said in the report. 

As well, the prior and current bids come as the firearms maker faces growing scrutiny for its sale of assault-style rifles amid an ongoing wave of deadly mass shootings. 

Currently, Remington is embroiled in a lawsuit filed by victims’ families in the 2012 Sandy Hook school shooting. The U.S. Supreme Court in November allowed the case to move forward despite federal shield laws after a Connecticut state court argued the company violated state laws in marketing the Bushmaster XM15-E2S rifle “for use in assaults against human beings.”

The Wall Street Journal report last week noted that any sale as part of a bankruptcy process would leave the new owners off the hook for any prior legal liabilities. 

It remains unclear if the tribe’s current bid involves a similar transformation of the Remington business, but a representative from Navajo Nation told the Times in 2018 that the tribe was “indifferent to the AR-15 and happy to leave that business behind.”

As well, if the new plan still includes a focus on sales to police, the tribe may face internal pressures given the widespread Indigenous support of efforts to draw attention to police brutality in the wake of the killing of George Floyd by a Minneapolis police officer.

The post Reports: Navajo Nation takes second shot at acquiring firearms maker Remington appeared first on Native News Online.

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