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.
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.
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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.”
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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