Winchester Fight Continues

Last Friday, June 23, was the deadline for qualified bidders to submit proposals for acquisition of the New Haven, Connecticut facilities of U-S Repeating Arms Company (USRAC), licensee of the Winchester firearms brand.

That facility was closed last March 29 after current owner, Belgium's Herstal Group, decided to stop their ongoing - and mounting - financial losses at the storied location. Since then, New Haven Mayor John DeStefano has waged a no-holds barred campaign to keep the facility - and its jobs - in New Haven.

That campaign has included bringing in outside assistance to help woo a new buyer for USRAC.

To that end, the city and USRAC hired outside consultant Kevin S. Tierney of Workout Solutions, Inc. a Guilford, Connecticut business consulting group, and Michael H. Blank of MHB Enterprises of St. Charles, Missouri.

Tierney's specialty is workouts and corporate restructuring. Blank's expertise includes stints in the financial industry, but might best be described as enthusiasm and a dedication to see Winchester stay in New Haven, Connecticut, ideally, but to remain an American-manufacturing company, minimally.

Last evening, I spoke with Blank about progress they've made in their drive to save Winchester.

"I think we're doing pretty good," says, Blank, "our original offering period was to be 90 days; it was cut to 75. The article that ran in the Wall Street Journal on the fifteenth was scheduled to run two weeks sooner but bumped for the killing of Moussawi, so we've actually lost about a month in the process, but we're pretty pleased."

So what' constitutes "pretty pleased"?

Qualified prospects, according to Blank.

Prospects he says includes one "full line American firearms manufacturer" and other companies and individuals who appear qualified to close the transaction.

"We're still answering questions for some groups, " he says, "and we've had a couple who came to the table who decided they'd be better suited as equity participants behind another company."

What, I asked, about the fact that a buyer would only be acquiring the assets of USRAC. After all, the Winchester brand is owned my Olin Corporation.

Wouldn't a USRACC buyer would have to deal with Olin for the license of the Winchester firearms name, especially since the USRAC/Herstal license expires at the end of 2006?

Yes, says Blank, but isn't necessarily the deal breaker it might seem.

"We have a gentleman's agreement with Olin," he says, "prior to the close of the transaction, the buyer will sit with Olin, share their vision for Winchester and Olin would decide if the license would go to the purchaser."

In other words, a potential purchaser would be assured of the ability to license the Winchester brand prior to closure.

So, I asked, what about keeping Winchester in New Haven, are all the potentials agreeing to keep the 140 year old location operating - even with its modernizations?

Short answer, no.

However, Blank explained, the city of New Haven and Connecticut have offered what he characterizes as "unique and imaginative" solutions to help lower the undisputedly high costs of doing business there.

Despite that, however, there's no certainty that USRAC/Winchester would remain in its longtime home.

"We've done all we can to advocate New Haven and Connecticut," Blank says, "but we're also representing USRAC. Some qualified bidders would like to stay in New Haven and others are not interested. We've done our advocacy work for the area, but we're also trying to keep the company in the United States."

Blank, an unabashed fan of Winchester, also admits that there are some fairly strong requirements a potential acquirer would have to fulfill, including a requirement to being a "full-line firearms manufacturer" producing, minimally, the Winchester Models 70 and 94 rifles and the Model 1300 shotgun.

Other requirement set forth in the licensing criteria call for the manufacture of 150,000 "consistently high-quality" firearms annually, and service for Winchester brand firearms manufactured prior to 1981.

In the event the ultimate acquirer were another manufacturer, the Winchester products would be kept "distinct from any other products" but the agreement would also permit the development and marketing of new models "subject to licensor (Olin) approval.

It is important to note that the qualifications listed in the buyer qualification package constitute the ideal arrangement the current parties would like to see.

As in any business transaction, the potential purchaser/licensee could counter offer on the requirements.

The next critical deadline is July 15.

On that date, bidders are to be notified if they and their offers will be moving to the next step of the process.

But it is a very short window.

Under the "standstill agreement" struck with Herstal, the transaction must take place no later than September 1.

So will there be a deal?

"We're not there yet, but I'm very optimistic," says Blank. "There have been some amazing things that have happened to get us this far."

"I went into a bookstore to get a coffee," he says,"and Wayne LaPierre of the NRA was there doing a book signing. We had a long chat, and he's certainly voicing his support. I was on NRA News last week, and it looks like we're going to get some more support."

"We have great plans and some unique ideas," he says, "and we're still talking to some equity players who want to get involved, so I'm optimistic."

We'll keep you posted.

--- Jim Shepherd

Thanks, Tom. roger

This was from the "Shooting Wire" sorry I should have put it it the opening post

Maybe they will have Mirouko build the M70, We will get some quality control and nice fit and finish

Lyle

quote:

Prospects he says includes one "full line American firearms manufacturer"

Am I to assume this means a company that produces handguns, shotguns and rifles?...opinion anyone?

This means Ruger?????????

Or does it mean rimfire, centerfire, and smoothbore?.....

I'm curious as to what a potential buyer thinks needs to be done to make it profitable?

I DON"T believe they'd have to call them Winchesters. I believe "USRAC Model 70" and "USRAC Model 94" would be sufficient....

Besides, it would benefit OLIN to have "Winchester" firearms on the market along with Winchester ammo......

quote:

Originally posted by vapodog:

quote:

Prospects he says includes one "full line American firearms manufacturer"

Am I to assume this means a company that produces handguns, shotguns and rifles?...opinion anyone?

This means Ruger?????????

Or does it mean rimfire, centerfire, and smoothbore?.....

If my [very limited] memory serves me Smith & Wesson had been lurking around the deal. Another possibility perhaps?