Germany is turning on H&K and their G36

Last year, Berlin reversed course on arms exports following a storm of media criticism. Tighter restrictions ground HK's Middle East business to a halt, hammering revenues.

Even worse, for a company that prides itself on engineering it likens to "fine watchmaking", the government is now questioning the quality of its signature product.

The G36, Berlin says, does not shoot straight in hot weather or when it heats up through constant firing.

"This weapon, the way it is now constructed, has no future in the German armed forces," Defence Minister Ursula von der Leyen declared last month.

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Owner Heeschen is scrambling to repair HK's reputation and finances.

He told Reuters that to offset the stalled Middle East business, which hit revenues by 50 million euros in 2014, he wants to expand in the U.S. civilian market.

In a nod to sensitivities about school shootings, he says the focus will be on selling pistols rather than assault rifles. His goal is to boost U.S. civilian revenues to $100 million in 2015, more than double the 2013 level.

"This will more than compensate for the decline on the military side," Heeschen said.

But concerns about the firm's finances linger. HK is paying a whopping 9.5 percent interest rate on a 295 million euro bond that falls due in 2018. It recently secured a new 30 million euro credit facility, but on even more onerous terms.

Rating agency Moody's said this month that the firm's capital structure was "unsustainable" without new capital.

But Heeschen says he is not considering selling up. "Who would want to buy the company now?" he said.

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OrbitalEllipses said:

Heard some talk that this is how the German government will rid themselves of the G36...so they can fast track adoption of the HK416.

Germany would end up bailing H&K out you'd think; they don't really have an alternative supplier/designer of their army's firearms now do they?

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501st said:

There is also the Sig Partnership.

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OrbitalEllipses said:

Heard some talk that this is how the German government will rid themselves of the G36...so they can fast track adoption of the HK416.

Germany would end up bailing H&K out you'd think; they don't really have an alternative supplier/designer of their army's firearms now do they?

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Traveler said:

Glock and Austria, they are historic partners. What could go wrong?

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OrbitalEllipses said:

Don't think the Bundeswehr is adopting a tarted up AK anytime soon.

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OrbitalEllipses said:

Not really a fan of German/Austrian partnership...

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