German gun manufacturer Heckler & Koch saw its bonds rise to a 15-month high after majority shareholder Andreas Heeschen gave the company 60 million Euro in cash (approximately $64 million) as a shareholder loan repayment. The cash injection is expected to strengthen the company after the German government recently announced that it will be seeking a replacement for the G36, a Heckler & Koch firearm that has been the German army’s main assault rifle for about 20 years.
The decision came after a controversial report that the G36 has accuracy issues when hot, something which the company has disputed in court. Additionally, Heckler & Koch saw some controversy of its own when German customs authorities accused six former employees of violating trade laws by selling weapons to customers in Mexico. German authorities also recently blocked some of the company’s exports to the Middle East.
Despite the recent actions by the German government, Hecker & Koch maintains that it shares a close bond with its home country. Heeschen, who also serves the company’s managing director, mentioned this when he announced the loan earlier this week.
“Heckler & Koch is an important element of the supply chain and the security infrastructure of Germany and its NATO partners,” Heeschen said in a press release. “We expect Europe to become more exposed to conflicts on the international stage in future. It is important for our company to be able to respond with even greater flexibility to our customers’ demands.”
The loan will be used to pay off part of the company’s debt and to help raise its credit rating to a “B.” In order to do that, Heeschen estimates that the company will have to reduce its roughly $320 million debt by a third.
“With the reduction of our net debt, we want to send a strong signal to our clients that Heckler & Koch continues to be a reliable and growth-oriented partner. Heckler & Koch is a global leader in the manufacturing and development of innovative technologies for the armies and police forces of Western NATO states. Our aspiration as a technology leader is to not only maintain our position, but to expand it.”
Bloomberg reported that the news of the cash injection did raise the gun maker’s bonds by four cents on Monday, putting the bond price at its highest since August of 2014. The company said recently that it will be expanding sales in the United States following its troubles in Germany. Currently leading the company’s sales in North America is the VP9, an industry-acclaimed, striker-fired 9x19mm pistol.