Hedge Fund Whitebox Advisors is Making a Big Bet on Gunmaker Remington

November 12, 2019 | Fund Updates, Hedge Funds, Investments, News

While more investors seek ESG factors, one hedge fund is willing to act as a lender to the Remington Outdoor Company.

Whitebox Advisors is replacing a number of banks as a lender to Remington Outdoor Company. While Wall Street turns away from gun producers, the credit-focused hedge fund sees opportunity on the horizon.

Reuters reports that the hedge fund refinanced a $193 million loan to Remington. Seven banks had initially financed that loan. Customers, investors, and politicians have pressured financial institutions to stop doing business with Remington.

Whitebox Advisors Bucks the Wall Street Trend

Banks have turned away from Remington in the wake of the Sandy Hook Elementary School shooting in 2012. The company filed for bankruptcy in 2017. Although it exited bankruptcy, it still faces a lawsuit from victims’ families. Remington produces the AR-15-style semi-automatic rifle used in the assault.

Whitebox Advisors’ debt is secured by Remington assets.

Finally, Andy Redleaf, a 1978 Yale graduate, founded the Minnesota-based hedge fund. He stepped away from the $6 billion firm in August. The company has previously invested in headline-generating debt assets in recent years. The list also includes debt from Puerto Rico, Sears Holdings, and Caesar’s Entertainment.

Update:  On Tuesday, the U.S. Supreme Court rejected Remington’s appeal to have the court case blocked. Families argue that the company should be liable for the 2012 assault. Remington was asking the Supreme Court how courts should interpret the 2005 Protection of Lawful Commerce in Arms Act, which grants broad immunity to gun-markers and dealers when a weapon is used in a crime. Here’s NPR.

Related: Dan Loeb’s Third Point Holds a $700 Million Stake in EssilorLuxottica

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