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
Staff Writer

Gun makers, retailers and investors took steps Tuesday to distance themselves from the rifle that was used in last week's fatal shootings in Connecticut, as public pressure grew to reinstate a federal ban on assault weapons.

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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

Cerberus Capital Management, the private equity firm that owns Bushmaster Firearms, the manufacturer of the .223 AR-15 rifle, said it would immediately hire a financial adviser to sell its stake in Freedom Group, a holding company that includes Bushmaster, Remington Arms Co., Marlin Firearms Co., Barnes Bullets and Para USA Inc., a handgun maker.

Bushmaster guns were manufactured in Maine until last year, when production was moved out of the state.

"It is apparent that the Sandy Hook (Elementary School) tragedy was a watershed event that has raised the national debate on gun control to an unprecedented level," Cerberus Capital Management said in a prepared statement. "We are investors, not statesmen or policy makers. ... It is not our role to take positions, or attempt to shape or influence the gun control policy debate. That is the job of our federal and state legislators."

Windham Weaponry, founded in Windham last year by the former owners of Bushmaster Firearms International LLC, will not be a prospective buyer.

"We have no interest in Bushmaster," said Allen Faraday, executive vice president of operations with Windham Weaponry. "We started Windham Weaponry to put Maine people back to work who had lost their jobs."

The company hired many of the 73 employees who were laid off when Bushmaster moved out of state in March 2011.

Bushmaster Firearms International was owned previously by Richard Dyke, 79, who bought the bankrupt business in 1976 and moved it from Bangor to Windham. He sold Bushmaster to Cerberus in 2006 for $70 million.

Retailers have responded to Friday's shooting by pulling the Bushmaster AR-15 from their shelves.

On Tuesday, Cabela's was still offering Bushmaster AR-15 rifles for $730 to $1,040 each on its website, but the guns were not for sale at the sporting goods retailer's store in Connecticut. The company did not return calls seeking comment.

Dick's Sporting Goods said in a prepared statement that it had removed all guns from its store near Newtown, Conn., "out of respect for the victims and their families," and that it had suspended sales of modern sporting rifles in its stores nationwide.

Walmart removed the information page for the Bushmaster Patrolman's Carbine M4A3 rifle from its website, Reuters reported.

Shares of gun makers and retailers fell again Tuesday, continuing a slide that began Friday.

Shares of Smith & Wesson Holding Corp. dropped 10 percent, and Sturm Ruger & Co., which makes military-style weapons, fell 7.7 percent.

Analysts with CL King downgraded Sturm Ruger & Co. on Tuesday from a "buy" rating to a "neutral" rating.

Cabela's stock dropped 5.9 percent.

Cerberus announced its plan to sell off Bushmaster after the California State Teachers' Retirement System said Monday that it was reviewing its investment in Cerberus.

California Treasurer Bill Lockyer may order the teachers' fund and the California Public Employees' Retirement System to strip their portfolios of all investments in gun manufacturers.

The Maine Public Employees Retirement System doesn't appear to have investment connections to Bushmaster. Sandy Matheson, executive director of the pension system, said the organization reviewed its 31 private equity investments and found no connection to gun manufacturers.

The controversy over California's investment in Cerberus stemmed in part from the fact that California's pension system considers non-economic factors before picking its investments and excludes investments that "promote, condone or facilitate social injury."

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