Colt Defense Secures Loan, Eases Financial pressures

Colt Defense Large_Colt Defense LLC

Colt Defense got in hot water recently; there was some uncertainty over whether the manufacturer would default on its outstanding loans. The firm recently announced good news regarding their financial troubles, however, as they were able to secure a loan for $33 million. HeraldOnline.com reports:

— Colt Defense LLC (“Colt”) announced today that it has entered into a new senior secured term loan facility with Cortland Capital Market Services LLC, as agent, and certain lender parties thereto (the “Cortland Facility”). The Cortland Facility provides for a term loan of $33 million, which includes the arrangement of certain cash collateralized letters of credit in an aggregate face amount of up to $7 million, of which approximately $5 million will be used in connection with the termination of Colt’s existing revolving credit agreement. Proceeds from the Cortland Facility will be used to repay all amounts outstanding under Colt’s existing revolving credit agreement and terminate such revolving credit agreement, for cash collateral for certain letters of credit, to pay fees incurred in connection with the consummation of the Cortland Facility and the termination of the existing revolving credit agreement, for additional liquidity and for general working capital purposes. The Cortland Facility provides for the accrual of interest at a fixed rate of 10% per annum and matures August 15, 2018. The lenders under Colt’s existing term loan agreement dated as of November 17, 2014 (the “Term Loan Agreement”) have also agreed to amendments to the Term Loan Agreement necessary for Colt to enter into the Cortland Facility.

Being a loan, this only delays Colt’s problems. They will need to secure more large government orders and ramp up their civilian marketing efforts to offset the hit they have taken in the past few years.

We covered Colt’s financial troubles more in depth last year, in November when there was a great deal of uncertainty about the future of the company.



Nathaniel F

Nathaniel is a history enthusiast and firearms hobbyist whose primary interest lies in military small arms technological developments beginning with the smokeless powder era. In addition to contributing to The Firearm Blog, he runs 196,800 Revolutions Per Minute, a blog devoted to modern small arms design and theory. He can be reached via email at nathaniel.f@staff.thefirearmblog.com.


Advertisement

  • dannye

    Just extending the miserable existence of a company only good for no-bid government contracts.

  • Vitsaus

    Whoah, I can wipe all the sweat from my brow and palms now… For a while there I totally thought Colt was totally going under. I guess I shouldn’t have emptied my life savings on Boy Scouts of America and Publisher’s Clearing House engraved Commemorative 1911s and the 12 6920s that I rushed out to buy so that I could name my price in 6 months when Colt was out of existance. Geeze, I can’t believe I didn’t see it coming that they would be rescued from liquidation. Boy was this a pleasant unexpected surprise. Now I can look forward to the innovative products they are going to release next year, like the limited edition Moro Uprising Anniversary series 80 FDE railgun.

  • Stephen

    They could always try innovating; maybe produce something new. Other outfits seem to stay away from financial ruin using this strategy.

    • Vitsaus

      Innovation would be ideal, but their pricing is far from competitive given what’s out there. If they don’t want to do anything new, then they could at least make their stuff more appealing for the consumer’s wallet. 900 bucks goes a lot father with every other major 1911 producer than it does with Colt.

    • What I find is interesting is the amount of innovation that actually goes on at Colt – but that no one cares for. The Colt IAR is actually a decent idea, and the Colt articulating linked piston is also interesting.

      I think part of Colt’s problem is their lack of marketing towards the consumer market; they have a great firearm in the 6920 at a good price point, but they don’t advertise like DD, S&W, or Ruger.

      • Vitsaus

        I agree about the 6920, but its hardly a sluggish seller for them. Having worked for a few FFLs over my time, I found that one could easily sell 2-3 Colt 6920s for every DD or LMT, 5 for every Noveske, and about the same for any S&W aside from the Sport model. In the case of the 6920, it more or less markets itself, and tons of folks buy them. But they can’t rely on that gun alone right now, as a lot of buyers are a bit “AR15’ed out” after the last few panics and the oversaturation of the platform.

        • That’s a great point. Colt may well need to diversify their product line. That’s not exactly the same thing as innovating, but you look at S&W’s, Ruger’s, or heck, even Kel-Tec’s product lines, and they’ve got more to offer the consumer than just AR-15s and 1911s.

          • Jack Webb

            I wish they still made the Python/Anaconda…. and make that frame in .41 Mag pleeze. kthanxbai

          • Anon. E Maus

            I figure it would easier and cheaper to just redevelop the Trooper instead, similar enough, but cheaper to make and with tougher internals than the Python.

        • David Knuth

          So, maybe they could build something new or different that could be the next great AR-15. How about a Tavor competitor? A better .308-cal rifle?

      • Stephen

        Considering that I had to google both of those products (Colt IAR, Colt articulating link piston) I think you may be correct. 😉

  • Alas, there is still no guarantee that Colt will have enough cash to make the interest payment on its Senior Notes due on May 15.

  • floppyscience

    How’d they convince someone to give them a loan? Did they wow them with the neato $8k Colt-branded OOW BAR rifles that will definitely save the company and put them in the black again?

  • sam

    Stop hurting yourself like this, Colt. Please just let go. You had a good century there up until the Ottoman Empire fell, no one can ever take that from you, but it’s time to fade away now :'(

  • Cedar_92

    They need to lower their prices. Everyone and their grandmother wants a Colt SAA in. 45 LC, but not at $1800.00

  • Little Johnny

    Simple solution for Colt, make guns and lots of them. Make 1911s configured the way people want them, like Ruger, CZ, Dan Wesson, Springfield, Kimber, and all the rest. Do some research for goodness sakes. I would love to have one of their Marine addition 1911s but at their price I could buy a killer Nighthawk Custom.

    They have been overpriced for too long. Being rare doesn’t create value, that’s only half of the economic puzzle. There are too many equivalents, what they do have is brand recognition and they need to put that to use.

  • Don

    They need to look beyond the government market they were so enamored with for so long and look to what civilians want. And they really need to look beyond the ar-15 because there is huge competition there. The civilian market will keep you afloat a lot better than waiting for the government to come back. The biggest problem for colt is that they have been stuck in the golden age of the 1960s. Bring back more of the nostalgia line for a decent price. Innovate new product lines. Diversify your products. There is more to guns than 1911s and ar-15s. Create new products and innovate.