Post by: netcoyote on June 15, 2015, 09:52:50 AM
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Colt Defense Files for Chapter 11 Bankruptcy Protection
Gun maker struggled after loss of Army contract and missed filing deadline for annual report
(https://hunting-washington.com/smf/proxy.php?request=http%3A%2F%2Fsi.wsj.net%2Fpublic%2Fresources%2Fimages%2FBN-IX363_0614co_M_20150614154254.jpg&hash=30b130e790851c5e5a06563b5c81fc410c2c92f2)
By MATT JARZEMSKY
Updated June 15, 2015 8:12 a.m. ET
Gun maker Colt Defense LLC said late Sunday it is filing for chapter 11 bankruptcy-court protection, amid business-execution issues and a heavy debt burden.
The company has secured $20 million in financing from its existing senior lenders to continue operating while in bankruptcy and expects to remain in business after the restructuring.
The West Hartford, Conn., company, with a legacy dating to 19th century New England, developed a pistol it calls “the gun that won the West” and enjoyed a lucrative stretch in the late 1990s and early 2000s as supplier to the U.S. military of the M4 line of firearms widely used by front-line troops.
But Colt has struggled in recent years with supply-chain and working capital issues, a slowdown in rifle sales and its 2013 loss of a key contract to supply the U.S. Army with the M4. As a result of some of its operational issues, the company has had accounting problems that caused it to revise prior years’ reported financial results and miss a creditor’s initial filing deadline for an annual report, according to regulatory filings.
Colt plans to try to reduce its $355 million debt burden via a court-supervised auction of its business, to generate proceeds to repay some of its lenders.
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Colt has selected its private-equity backer, Sciens Management LLC, as the “stalking horse”—or lead bidder—in the sale.
As its cash dwindled, Colt spent much of the past year seeking financing and angling for better terms and restructuring-plan support from creditors.
It tried to win bondholders’ backing for a debt-for-debt exchange or a “prepackaged bankruptcy” filing that could have smoothed its trip through chapter 11. But bondholders balked at the deals, either of which would have slashed the amount the company owed them. As of June 1, just 5.9% of bondholders had registered their support for Colt’s proposal, according to the company.
Colt borrowed $70 million from Morgan Stanley last year to pay interest on its bonds, and in February it warned it might not have enough cash to make an interest payment by a June 15 deadline. This year it struck a $33 million refinancing deal with hedge fund Marblegate Asset Management LLC that also freed up some additional liquidity, according to filings.
Ultimately, it failed to turn its performance around or negotiate a deal with all its creditors before Monday’s payment deadline, people familiar with the matter said, setting up a default.
Colt traces its roots to New England inventor and industrialist Samuel Colt, a pioneer in the mass production of the revolver who opened his first plant in Paterson, N.J., in 1836, according to the company’s website.
Its fortunes have ebbed and flowed over the years, including a previous trip through chapter 11 bankruptcy, from which it emerged in 1994.
Sciens Management recently owned 87% of the company, according to a regulatory filing. Some of Sciens’s principals own stakes in the owner of its West Hartford facility, which has a lease expiring in October.
http://www.wsj.com/articles/colt-defense-to-file-for-chapter-11-bankruptcy-protection-by-monday-1434310925?KEYWORDS=colt (http://www.wsj.com/articles/colt-defense-to-file-for-chapter-11-bankruptcy-protection-by-monday-1434310925?KEYWORDS=colt)
Post by: baker5150 on June 15, 2015, 09:58:55 AM
Post by: h2ofowlr on June 15, 2015, 10:09:13 AM
Post by: fishngamereaper on June 15, 2015, 10:16:44 AM
This has been coming for the past few years. Been reading a bunch about it. You don't land a super lucrative military contract, your left kicking the curb. They became a commodity item unfortunately. Time to invest in more lean manufacturing.
To bad really. Poor management of a good product. I've been following this closely for a year or so now and was hoping they where going to right the ship. Guess not.
Post by: pianoman9701 on June 15, 2015, 11:28:38 AM
Post by: Firedogg on June 15, 2015, 11:55:43 AM
Post by: grundy53 on June 15, 2015, 12:30:05 PM
It will be reorganized, moved out of CT, and be a completely different looking company when this all pans out.Yup. Or bought by someone else. Either way they need to get out of Connecticut.
Post by: HawkCreek on June 15, 2015, 12:40:24 PM
Post by: lee on June 16, 2015, 06:13:39 AM
Didn't they go bankrupt about 20 years ago?
Yupper.
The company has really never recovered from Union strike it experienced back in the late 80's. The strike was 4 years long and ended in Aug/1990. It nearly broke them.
It appears that many of today's consumers see Colt products that are over priced and experiencing quality control issues.
I remember back in my Military days, Colt M-16's being produced that were failing acceptance QC checks.
I hope that Colt survives.
Lee
Post by: TheHunt on June 16, 2015, 06:56:23 AM
That is really too bad as I really like some of their products.
Post by: JimmyHoffa on June 16, 2015, 10:04:04 AM
Post by: timberghost72 on June 18, 2015, 07:27:33 AM
Post by: stevemiller on June 29, 2015, 03:56:01 PM
Post by: JimmyHoffa on June 29, 2015, 04:01:13 PM
so with this co. out who landed the military contract from them?I know its been a while so I cant remember who it was and were they an American based co. or other?It had been Beretta. Military is working on a replacement for the M9. Beretta has a US division, but is an Italian company. I think that is accurate and answers your question.
Post by: stevemiller on June 29, 2015, 04:03:55 PM
Post by: stevemiller on June 29, 2015, 04:06:11 PM
Post by: ArcherTL on June 30, 2015, 12:29:25 PM
they are in big trouble when they restructure if they cant come up a new design that is commercially successful or secure military contracts. the 1911 market has lots of options. they are lots of AR manufactures plus people are building their own rifles. the 1873 single action market has lots of competition from Italian manufactures and the ruger vaquero.
Post by: follow maggie on July 05, 2015, 06:58:41 PM