Remington bankruptcy shows depth of US gun slump

Yahoo – AFP, John BIERS, March 26, 2018

Gun reform advocates line Pennsylvania Avenue while attending the March for
Our Lives rally March 24, 2018 in Washington, DC (AFP Photo/WIN MCNAMEE)

New York (AFP) - The US gunmaker Remington filed for bankruptcy protection on Sunday, a day after marchers swarmed US cities nationwide to call for greater regulation of firearms.

But the hard times now facing gun companies began in November 2016.

That was when Donald Trump's surprise election victory in the US led to a sudden drop in US firearms demand, which had been robust until then as gun owners stockpiled in anticipation of a Hillary Clinton presidency.

With Trump an avowed gun rights supporter with boasts of warm ties to the National Rifle Association, in office, gun enthusiasts slowed purchases, causing a glut. Massive discounting and deep layoffs at firearms companies soon followed.

Gunmakers now face intensifying public scrutiny following the February 14 Florida school shooting that left 17 dead, sparking Saturday's "March for our Lives."

Retailers such as Dick's Sporting Goods and Walmart have moved to to distance themselves from the extreme end of the political spectrum on gun rights -- with aversion spreading to the financial sector as well.

But the immediate problem facing Remington and other firearms companies is the expectation for "new, lower levels of consumer firearm demand," American Outdoor Brands chief executive James Debney said earlier this month.

He said "flattish" firearms sales could persist for another 12-18 months.

Headquartered in North Carolina, Remington dates to 1816, making it one of the nation's oldest gunmakers.

Besides guns, it makes bullets and barrel equipment, employing 2,700 people at seven facilities in the US and exporting to 52 countries, chief financial officer Stephen Jackson said in a filing in US Bankruptcy Court in Delaware.

Remington experienced a "significant decline in sales" over the last year when demand "ultimately did not materialize" after the company boosted output in 2016, Jackson said.

Operating profits in 2017 dwindled to just $33.6 million, less than one third the level just two years earlier, Jackson said.

Some financers say no

On February 12, two days before the Parkland shooting, Remington signaled plans to file for bankruptcy protection, saying it reached a preliminary agreement with its creditors to allow the company to operate while it reorganizes.

Protestors chant during the March for Our Lives rally on March 24, 2018 in 

Chicago, Illinois (AFP Photo/JIM YOUNG)

Remington however encountered difficulty with efforts to expand its pool of financers for the period after the bankruptcy filing, according to Ari Lefkovits, managing partner of Lazard Freres, which was hired by Remington.

"Lazard approached over 30 potential funding sources to provide such financing," Lefkovitz said. "The vast majority of lenders contacted, however, indicated that they were reluctant to provide financing to firearms manufacturers."

Remington instead turned to its existing lenders, including JPMorgan Chase and Franklin Advisers, Lefkovits said. Several others with long relationships with Remington, including Bank of America and Wells Fargo, are also providing financing during the propcess.

The reorganization, considered a "prepackaged" bankruptcy because the major parties have already reached agreement, would eliminate $775 million in debt and shift to creditors control of new equity.

Besides the financial incentive to stay in the transaction, banks involved in the bankruptcy might face legal liabilities if they walked away now.

Bank of America and JPMorgan declined to comment. Wells Fargo did not immediately respond to request for comment.

The bankruptcy comes amid intensifying pressure on major companies to take a stand on guns.

Last week, Citigroup became the first major US bank to unveil significant new policies on guns, announcing it would require retail clients to bar sales to those under 21 or to people who have not passed a background check.

Citigroup said it would also start "due diligence" among its gun manufacturing clients to understand their operations and whether they are in line with "common sense" gun policy.

Asset manager BlackRock, the largest shareholder in several leading gun stocks, has also signaled plans to intensify scrutiny.

It said in a March 2 notice that it was taking steps to reach out to clients who do not want to hold gun stocks and stepping up engagement with firearms executives on their products.

FCA bans £43,000 fare dodger from working in financial services

Financial Conduct Authority says conduct of former Blackrock MD Jonathan Paul Burrows fell short of the standards expected in the City

The Guardian, Jennifer Rankin, Monday 15 December 2014

Jonathan Paul Burrows has been barred by the Financial Conduct Authority
 from taking any job in the regulated financial services industry. Photograph: Jamie
Wiseman / Daily Mail/Solo Syndication

A former City executive has been banned for life from any senior role in the financial services industry, after being exposed as one of the UK’s biggest train fare dodgers.

Jonathan Paul Burrows, a former managing director at Blackrock Asset Management, has been barred by the Financial Conduct Authority from taking any responsible role in the financial services industry.

Announcing the ban, the FCA’s director of enforcement and financial crime, Tracey McDermott, said: “Burrows held a senior position within the financial services industry. His conduct fell short of the standards we expect. Approved persons must act with honesty and integrity at all times and, where they do not, we will take action.”

His dishonest behaviour came to the attention of the City watchdog after it came to light that he had saved himself almost £43,000 over several years by exploiting a loophole at the ticket barriers.

The East Sussex commuter boarded the London-bound train at Stonegate, a rural station with no ticket barriers. When he arrived at Cannon Street station in London, he tapped in using an Oyster card, paying a £7.20 fare, rather than the £21.50 cost of his journey.

Burrows avoided prosecution after making an out-of-court-settlement with Southeastern railways, but had to resign from his high-flying job at Blackrock after a public outcry.

He told the FCA he knew he was breaking the law and had not disclosed his behaviour to his employer. The FCA said they had taken these facts into account when deciding what action to take.

Today’s ruling ends Burrows’s lucrative City career. At Blackrock he had reportedly earned £1m a year. He will never again be allowed into a position of authority, although, in theory, he could take junior back-office jobs.

In a statement after the FCA ruling, Burrows said: “I have always recognised that what I did was foolish. I have apologised to all concerned and reiterate that apology publicly today.”

“While I respect the FCA’s decision today, I also regret it, coming as it did after a 20-year career in the City that was without blemish. I recognise that the FCA has on its plate more profound wrongdoing than mine in the financial services sector, and I am sorry that my case has taken up its time at this critical juncture for the future of the City and its reputation.”

Last year the FCA banned 43 people from working in senior financial services jobs for failing the “fit and proper” test, but few attracted as much attention as Burrows. The fund manager initially managed to keep his identity secret through an out-of-court settlement that roused the anger of unions. At the time, Manuel Cortes, the leader of the TSSA transport union, said the anonymous agreement showed there was one law for the rich and one for the poor. Burrows’s identity was first revealed by the Daily Mail, who contrasted his “two huge, mortgage-free mansions in the East Sussex countryside” with the £4,500 cost of the season ticket.

The majority of people subject to an FCA ban have committed offences at work and Burrows is only the second person to be banned by for wrongdoing unrelated to his job. His case follows senior money-market manager Anthony Verrier, who earlier this year accepted an FCA ban , after being censured by a high court judge for dishonesty.

Many commuters voiced anger that Burrows avoided prosecution, but others expressed a sneaking admiration that he managed to get away with it for so long.

The £43,000 that Burrows repaid to Southeastern trains was calculated on the basis of single fares. This meant the settlement cost him £20,000 more than if he had bought season tickets.

Related Article:

Millionaire City executive who dodged £43,000 in train fares unmasked

Millionaire City executive who dodged £43,000 in train fares unmasked

Jonathan Burrows, 44, should have paid £21.50 for commute, but got away with paying £7.20 over period of five years

theguardian.com, Martin Williams, Saturday 2 August 2014

Southeastern railway kept Jonathan Burrows' identity quiet after he reimbursed
them promptly. Photograph: Johnny Green/PA

A millionaire City executive who dodged £43,000 in train fares and hoped to avoid prosecution has been unmasked.

Jonathan Burrows, 44, tried to keep his anonymity by reimbursing Southeastern railways within three days of being caught. His identity has been revealed, however, after an investigation by British Transport police that was triggered after the story first broke in April.

The investment executive is thought to be Britain's biggest fare dodger, after repeatedly exploiting a loophole in the Oyster card system on his daily commute to London.

His commute from his East Sussex home should have cost him £21.50, but Burrows, who earns up to £1m and owns two country mansions worth £4m, managed to pay just £7.20 over a period of five years.

When he was eventually caught in November, he told Southeastern he wanted his name kept secret because of the impact the scandal could have on his job, according to the Daily Mail.

But when British Transport police found out that Southeastern had let Burrows off quietly it launched a criminal investigation, which is ongoing.

The Financial Conduct Authority (FCA) also investigated Burrows over concerns that he could be unsuitable for working in the City. Last week he was forced to tell his managers at BlackRock that the regulator was investigating. He was suspended immediately from his job and eventually resigned.

Jonathan Mullen, a spokesman for BlackRock, said: "Jonathan Burrows has left BlackRock. What he is alleged to have done is totally contrary to our values and principles."

An FCA spokesman said that their investigation had been dropped following Burrows's resignation, but added that past misconduct is taken into consideration when people apply for fresh authorisation. It said: "That doesn't have to be a criminal record. It can be anything that calls into question someone's fitness and propriety to work in the industry."

Burrows could not be contacted for comment. Asked about the case by the Mail, he reportedly said: "Dunno what you're talking about."