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Originally Posted by midgetwaiter
In 2015 Ceberus announced they were going to spin Freedom Group which own Remington, Marlin, DPMS, AAC and Bushmaster out of the main fund due to investor pressure. It's difficult to track down exactly what the status of that process is but that seems consistent with this from the article:
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 they have a bunch of secured debt in place to finance that move they may not be able to use assets from their other funds to service it. It's getting a lot tougher for companies that aren't looking at declining sales and a credit downgrade to raise money via bonds right now. There may be only so much that Fienberg can do to keep the wolves at bay here.
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Because they are holding the primary equity position, there is no way they will let this company go down to the point of bankruptcy or receivership. At that point they get nothing back on their investment. They also stand to destroy the value of their fund and, of course, their perception.
I can guarantee they will shop it and drop it, likely at a loss on face value, but will sell it off.
They may need to exchange viable securities with the buyer to sweeten the pot.
"you buy Remington, at the cost of the debt, plus X, and we will give you X plus a multiplier in shares/funds of Y.
A classic private equity capital company strategy to recover as much on any poor investments and under performing equities.
Unfortunately, I've worked in Private equity organisations over the last 5-6 years and they extract, extract, extract and find any way they can to recover distressed investment.
But you are right the wolves will have their meat.