Colt USA & Canada Financial Woes??

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Gun Manufacturer Colt Warns of Possible Default
Company Is Likely to Miss $10.9 Million Payment to Bondholders on Nov. 17
Colt , maker of this battle pistol, said in a filing that it is likely to violate its term-loan agreement unless it can negotiate an amendment or alternate financing by Dec. 31. ENLARGE
Colt , maker of this battle pistol, said in a filing that it is likely to violate its term-loan agreement unless it can negotiate an amendment or alternate financing by Dec. 31. GETTY IMAGES
By STEPHANIE GLEASON
Updated Nov. 13, 2014 5:15 p.m. ET
4 COMMENTS
Colt Defense LLC warned that it could default by the end of the year, as the privately owned company, which has suffered from declining demand for rifles and handguns, is likely to miss a payment to bondholders.

The gun maker faces a $10.9 million payment to bondholders Nov. 17, according to a filing on Wednesday with the U.S. Securities and Exchange Commission. If Colt skips the payment, it will enter a 30-day grace period, but without payment by Dec. 15 it will be in default and bondholders can demand immediate, full payment.

Colt, which is controlled by investment firm Sciens Capital Management LLC, had $248.8 million outstanding on the bonds as of June 29. The bonds were trading in the mid-30 cents on the dollar—deep in distressed territory—on Thursday.

Sciens declined to comment.

Colt, which has been manufacturing firearms and supplying the U.S. military since the mid-1800s, isn’t alone in grappling with weak demand, especially for sporting rifles. Smith & Wesson Holding Corp. reported a 46% drop in operating income for its latest quarter. And Cerberus Capital Management LP-owned Freedom Group, which owns the Remington Arms and Bushmaster brands, was recently downgraded by Moody’s , which cited pressure on earnings and revenue amid demand volatility.

Colt faces a $10.9 million payment to bondholders Nov. 17. ENLARGE
Colt faces a $10.9 million payment to bondholders Nov. 17. ZUMA PRESS
Even if Colt is able to pay bondholders in time, it is “probable” that Colt will violate a $48.1 million term-loan agreement by Dec. 31 without an amendment or alternate financing, the company said. It added that it is in discussions with existing and potential lenders over the situation.

Lenders amended the agreement earlier this year, allowing Colt to skip three $1.9 million payments through March 2015.

Colt, which is based in West Hartford, Conn., and Kitchener, Ontario, declined to provide any additional information Thursday.

The company revealed its financial woes in Wednesday’s SEC filing to explain why it couldn’t file a quarterly financial report on time. Colt said it is down to $1 million in availability on its revolving credit facility and is still “working through accounting considerations and liquidity concerns.”

The gun maker said it expects to report a 50% to 60% decline in operating income for the quarter ended Sept. 28, compared with the year-earlier period. It also expects to swing to an operating loss for the first nine months of the year. Colt blamed its financial troubles on market trends including declining consumer sales of rifles and handguns and delays in sales to the U.S. government.

Colt was cut deep into junk territory by both Moody’s and Standard & Poor’s in recent months. Each rating firm maintains a negative outlook on the company. In the event of a default, S&P said in September that it expects bondholders to recover no more than 10% on the debt.

Write to Stephanie Gleason at stephanie.gleason@wsj.com

http://m.wsj.com/articles/gun-manufacturer-colt-warns-of-possible-default-1415892942?mobile=y


I guess nobody is immune in this economy ....

gadget
 
Leviathan024 said:
did all of the firearms manufacturers expect the buying craze to last forever?
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Colt certainly seems to have a history of expecting the good times to roll forever.

From the mid 90's to 2010 Colt totally shunned the consumer market, because they had an exclusive selling the M4 to the US military, at double what they were worth. They treated civilian owners like they didn't need them.

Then, when the M4 become open to bids, Colt all of sudden was tripping over themselves to offer guns to us commoners, in a booming market. It would seem they became a little too beggarly to be choosy.

Now, after more than 15 years of ridiculous profits, a single year of bust has them on the edge of bankruptcy. Clearly not a bunch that is adept at planning ahead.
 
ITAR is probably the single leading cause of their demise. I don't see it as declining sales in the North American market as much as other makers coming into the market. Maybe those other makers have something better to offer. I bought a rifle last June and based it on reviews and Colt never came into the picture. Choices were tikka, Savage and Ruger.
 
Edzzed said:
ITAR is probably the single leading cause of their demise. I don't see it as declining sales in the North American market as much as other makers coming into the market. Maybe those other makers have something better to offer. I bought a rifle last June and based it on reviews and Colt never came into the picture. Choices were tikka, Savage and Ruger.
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So you purchased a rifle that is not an AR-15 so you never considered Colt which makes only one model of bolt action rifle.
The bottom line is that it's greed. It's a privately held company which its owners are sucking dry.
 
This is nothinng new. They have been in this shape for the last. 3yrs. Its just a matter of time before they go under
Anyone that,st seen how they run the show could see the writing on the wall.
 
Wonder if that's why Colt Canada suddenly opened up civi sales.....at a huge markup, trying to raise some scratch.
 
Hitzy said:
Wonder if that's why Colt Canada suddenly opened up civi sales.....at a huge markup, trying to raise some scratch.
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My understanding is that CC had some excess capacity and fit a run of guns into it for the Civilian market. Keeping your staff working and product moving is usually a good way to stay in business.
 
Hitzy said:
Wonder if that's why Colt Canada suddenly opened up civi sales.....at a huge markup, trying to raise some scratch.
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There run by bad people that waste money and have no concept of business outside of living off government contracts. They never cared for civilian ownership in fact they despised it as a whole.
 
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