Cerberus’s Freedom Group Withdraws Plans for IPO
Freedom Group Inc., the firearms and ammunition company controlled by Stephen Feinberg’s buyout firm, called off its plans for an initial public offering.
The Madison, North Carolina, company filed with the Securities and Exchange Commission today to withdraw the registration statement for the stock sale. According to the filing, Freedom may hold a private offering instead.
Feinberg’s Cerberus Capital Management LP formed Freedom by acquiring competing arms manufacturers, including Remington Arms Co., and melding them into a single company. Freedom filed for the IPO in October 2009, only to experience several setbacks since then, including a slower gun market in 2010 and the September departure of Chief Executive Officer Theodore Torbeck.
“It was not going to happen until they re-staffed that position,” Bret Jordan, a senior research analyst with Nashville-based Avondale Partners LLC, said of the IPO. Jordan, who follows gun manufacturers such as Smith & Wesson Holding Corp., said Freedom’s decision to move some manufacturing operations “adds much more complexity to the story.”
Robert Nardelli, the former CEO of Chrysler LLC and Home Depot Inc., stepped in as temporary head of Freedom in October while the company searched for a permanent replacement for Torbeck. Nardelli had run Chrysler for Cerberus until 2009, when the carmaker filed for bankruptcy protection.
Cerberus, a private-equity and hedge-fund firm with about $22 billion in assets under management at the end of last year, began forming Freedom in April 2006 through the purchase of Bushmaster Firearms International LLC, a manufacturer of sporting rifles.
$200 Million Target
In the October 2009 filing for its IPO, Freedom said it would seek to raise as much as $200 million. Merrill Lynch, Pierce, Fenner & Smith, a unit of Charlotte, North Carolina- based Bank of America Corp., and Deutsche Bank Securities Inc. had planned to underwrite the IPO.
“At this time, the company has determined not to proceed with the initial public offering,” Freedom said in today’s filing. Fredric Roth, Freedom’s general counsel, didn’t immediately return a telephone call seeking comment.
Freedom said in today’s filing that it “may undertake a subsequent private offering” through Rule 155c of the Securities Act of 1933. The SEC adopted this rule in March 2001 to allow companies to switch to a private offering when a public stock sale is no longer as attractive.
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