Colt Defense, LLC is apparently having trouble paying off its loans. BusinessWeek reports:
Colt Defense LLC is seeking capital to stave off an “expected default” next month as gunmakers suffer from lower defense spending and as consumers purchase fewer firearms.
The 178-year-old weapons maker said it’s “probable” it won’t comply with a loan agreement by Dec. 31 and is seeking an amendment to avoid default, according to a filing yesterday. Colt, which didn’t file its annual report on time because of accounting and liquidity issues, also said it’s uncertain it can make a $10.9 million bond interest payment Nov. 17.
Colt, whose credit rating was cut by Standard & Poor’s today to CCC-, has been struggling to service its $308 million of debt after losing U.S. contracts due to defense budget pressures and amid dissipating concern that the government will limit the ownership of firearms. Consumers rushed to buy weapons after shootings in Newtown, Connecticut, and Aurora, Colorado, fueled speculation that federal restrictions would increase.
Colt is suffering from a loss of military contracts to FN and Remington, as well as a depressing commercial market. The relevant SEC filing can be found here.
Thanks to Daniel for the tip.