December 19, 2012

Owner seeks to sell rifle maker Bushmaster

It's selling off its shares, and retailers stop selling guns like the one used at the Newtown school.

By Jessica Hall jhall@pressherald.com
Staff Writer

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A Bushmaster AR-15 semi-automatic rifle and ammunition are displayed at the police headquarters in Seattle. The maker of the Bushmaster rapid-fire weapon was put up for sale on Tuesday as investors soured on the gun business.

2006 AP file photo

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In this Friday, Dec. 14, 2012 file photo provided by the Newtown Bee, Connecticut State Police lead a line of children from the Sandy Hook Elementary School in Newtown, Conn. after a shooting at the school. The private equity firm Cerberus will sell its stake in a firearms company that produced one of the weapons believed to have been used in the shootings at the elementary school, calling it a "watershed event" in the national debate on gun control. While saying that it's not its role to take positions or attempt to shape or influence the gun control debate, Cerberus said it is taking what action it can by selling its stake in the Freedom Group, which makes the Bushmaster rifle. (AP Photo/Newtown Bee, Shannon Hicks)

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PDF: Cerberus statement on divestiture

Matheson said investments by the Maine Public Employees Retirement System are based primarily on fiscal considerations.

Cerberus may have a tough time selling Freedom Group, the nation's biggest manufacturer of guns and ammunition, with nine plants and 3,100 employees. Investors are skittish about the increasing calls for politicians to address gun control.

The White House said Tuesday that President Obama is "actively supportive" of efforts to reinstate the federal ban on assault weapons, which expired in 2004.

The Freedom Group said earlier this year that changes in firearm regulations could "materially adversely" affect the types of guns it can make or sell, or add to its costs.

"Regulatory proposals, even if never enacted, may affect firearms or ammunition sales as a result of consumer perceptions," Freedom Group said in a previous filing with the U.S. Securities and Exchange Commission.

Cerberus Capital Management, founded in 1992, has about $20 billion in assets. It also owns Steward Health Care System, the for-profit hospital chain that tried to buy Portland-based Mercy Health System. The talks between the two health systems broke off earlier this month.

A Bushmaster assault rifle was used in the 2002 sniper shootings in Washington, D.C., Maryland and Virginia that left 10 dead and three wounded.

Bushmaster paid $550,000 to the families of some of the victims to settle claims of negligent distribution of weapons, but denied any wrongdoing in the case.

Cerberus expressed shock and grief at the killings in Newtown, but added that Freedom Group was not responsible. The firm declined to comment Tuesday on any potential liability that it or Freedom Group may face.

Martin Feinberg, the father of Cerberus' founder and CEO Stephen Feinberg, lives in Newtown, Conn., according to Bloomberg News.

Besides Cerberus, a few other private equity firms have stakes in firearms companies. Sciens Capital Management, for example, jointly owns Colt Defense.

-- Staff Writer Steve Mistler contributed to this report.

Staff Writer Jessica Hall can be contacted at 791-6316 or at:

jhall@mainetoday.com

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