Moody’s cuts Remington Outdoor to Caa2

Moody's Investors Service said it downgraded Remington Outdoor Co., Inc.'s corporate family rating to Caa2 from Caa1 and probability of default rating to Caa2-PD from Caa1-PD.

Moody’s said the action is due to its concern with Remington's weak operating performance, and the view that the company's capital structure is becoming unsustainable.

The SGL2 speculative grade liquidity rating was withdrawn.

The outlook is stable.

"Despite our expectation of a modest increase in revenue and earnings next year, we think debt/EBITDA will remain around 8 times," Moody’s senior credit officer Kevin Cassidy said in a news release.

"We feel that Remington's capital structure is becoming unsustainable due to the uncertainty over its ability to refinance debt that comes due in less than two years."

Revenue dropped almost 30% in Q1 2017 and EBITDA dropped 70%.

"We think revenue and earnings will continue falling in Q2 2017 versus Q2 2016," Cassidy added in the release.

There is continuing uncertainty about the timing of a recovery in the gun market, the agency noted.

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