Colt Says It Is Close to Deal To End Bankruptcy

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According to a recent article by business news outlet Reuters, Colt Defense may be close to a deal to bring the company through its ongoing bankruptcy. The success of this plan is critical to the survival of Colt in its current financial hands, as the alternative is that the company will be sold off. From Reuters:

WILMINGTON, Del (Reuters) – Gun maker Colt Defense and its creditors are close to a deal on a plan to bring the company out of bankruptcy, but if it fails, the business will go on the auction block next month, a company lawyer told a judge on Thursday.

Colt filed for bankruptcy earlier this year due to falling sales of its sport rifles and the loss of military contracts. The company’s private equity owner has been battling its bondholders for control of the West Hartford, Connecticut-based business, and the parties are pressured by Colt’s dwindling cash.

“It’s fair to say the parties are very close to a deal,” Colt lawyer John Rapisardi told the U.S. Bankruptcy Court in Wilmington, Delaware. “The parties are working to finalize a term sheet and an agreement can be reached in a couple days.”

Colt wanted more time for talks but was forced to court by Morgan Stanley, which is using its bankruptcy loan to demand the start of a court-supervised auction process.

Judge Laurie Silverstein paused the hearing and sent the parties into a conference room to work out an agreement. The parties agreed to auction procedures, but postponed by three weeks the deadline for bids and a sale. An auction would be held on Oct. 20.

Colt filed for bankruptcy in June with a plan to sell the company to its private equity owner, Sciens Capital Management, in return for some of Colt’s debt. Under that plan, which was abandoned, holders of the company’s $250 million in bonds would have received nothing.

Bondholders have proposed their own plan, which includes eliminating a large portion of their debt in return for control of the company.

A Sciens affiliate has an interest in the Colt lease, which expires in November, and creditors have alleged the private equity firm is using that lease to discourage possible bidders and unfairly increase its leverage in the case.

We’ve covered Colt’s financial woes extensively. You can read previous articles regarding Colt here, here, here, here, and here.

 

 



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.


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  • Mystick

    Here’s a plan… make stuff your customers want to buy that works, at a reasonable price.

    • Colt actually does that, though. Their issues are more in the management department.

      • Beomoose

        Yeah if you read enough about how Colt has been managed you won’t be talking about their product or prices. Yikes.

      • Kelly Jackson

        Colt had a lot of problems.

        For a long time they didn’t sell civilian guns banking only on a military contract.

        Then they let their product line lapse. No real serious attempt to build a polymer framed gun. Discontinued legacy products like the Python.

        Finally they got out Colt’d by other manufactures like Sig who were basically selling their guns in the form of the P238 while Colt wasn’t selling anything.

      • Vitsaus

        When a Colt Government model goes for more than a Springfield, SIG, or Kimber with easily arguable better features, then yes, price is one of their problems. When your money goes farther on a Daniel Defense or an LMT, there is a price problem.

        • What Colt Government Models are you looking at? Looks like the going rate for an O1991 is right around $700… Maybe a little higher than for a comparable SAI GI model, but only by a couple Jacksons at worst.

          Then there’s the 6920, which I’ve seen in stores for less than $900; and the 6720 routinely retails for less than that, even.

          Now, Colt has major problems with distribution, connecting with their suppliers, marketing, and of course the big overarching problem of management and a pretty boring product line, but the products they do offer are desirable, high quality, and inexpensive.

          • sean

            they are only now going for those low of prices because all the suppliers are dumping colt products…in the last three months ALL of my suppliers are trying to get rid of their colt products at a lost.

          • That may be, but 6920s have been at rock bottom for years now. Colt responded to DD edging into their market by dropping prices.

            I can’t say on their 1911s, since I haven’t watched them anywhere near as closely. But even if they have been higher, well yeah, they’re also not made in Brazil.

          • sean

            Kimber, springfield, ruger, remington, and S&W all make 1911 in the USA…Not one person here has mentioned Taurus and brazil…apparently we have a colt fanboy

          • sean

            Listen up, COLT. You are not special. You are not a beautiful or
            unique snowflake. You’re the same decaying organic matter as everything
            else.

          • You are not clever. You are the same kind of unoriginal David-Fincher-movie-quoting plebian as everyone else.

          • sean

            Yet clever enough to put a forward grip on a KSG so im not scared of it.

          • Yeah, they really keep me up at night. I just know one is gonna sneak into my bed and force me to use it in a steel match where I’ll accidentally shoot my hand off.

          • Springfield 1911s are made in Brazil.

            Ruger, Kimber, and S&W 1911s all start at approximately the same price as the Colt guns. Only Remington’s offering starts at a significantly lower price.

          • sean

            You need to update your Know-it-all…they are no longer in Brazil…actually for some time now. Lets also add Dan Wesson to that list of American made 1911 that are better made then colt for better price

          • Dan Wessons are more expensive than Colts.

          • sean

            Not for feature for feature.

          • Feel free to make a comparison, then. From what I can see, their budget offerings are very comparable.

          • E

            In WI, I’m still seeing bone stock (non-MOE) 6920s for $1100. And that’s places like Walmart, not “big box stores” like Cabela’s or Gander Mtn. Magpul furniture and cerakote versions are closer to $1300.

          • Prices are going to vary, but in general that “mil-spec” tier of AR-15 is going to start at about a grand, give or take a hundred bucks. Doesn’t matter if it’s a Colt, DD, FN, whatever.

          • TexTopCat

            Colt 1991 around $700
            Ruger SR1911 around $600, plus the Ruger is a much higher end gun in finish, sights, mags, and reputation.

          • Errr, I’m sure SR1911s are fine guns, but they also use cast frames. Not saying that’s necessarily a bad thing, but you certainly can make a cast frame gun cheaper than a forged frame gun.

            Also, SR1911s are just a hair under Colt 1911s, it’s not even a $100 difference in most cases.

          • TexTopCat

            Well, yes Ruger has an Investment cast frame and makes such parts for many of the other gun makers also. Now, it seems that Colt has a reputation for frame cracks. Now, granted the SR1911 has not been out as long as the Colt models, but Ruger frames have a much better track record to date.
            Now, if you should have a frame problem, which company would you expect to make things right?
            Also, by the time you replace the sights to something more like the Ruger sights, the difference is more than $100.
            Also, if you look at SS version of the colt you are looking at $800 instead of 700. So, I figure the Colt is about 25% over priced,

          • For a forged frame gun, doesn’t sound like Colt is substantially overpriced. Comparing apples to oranges there.

          • sean

            WHY ARE YOU DEFENDING A COMPANY THAT DOESNT EVEN BELIEVE YOU SHOULD OWN A GUN…FOR A HISTORY GUY YOU SHOULD KNOW WHAT THEY DID DURING THE CLINTON YEARS

          • I’m stating the facts as I see them, not defending Colt. If I felt Colt’s guns were overpriced, I’d say so. Believe it or not, I have no brand loyalty to Colt.

    • Joshua

      Yea their rifles are some of the best priced out there for what you get. Management however has been take, take, taking all the money and put Colt in the hole.

      • Beju

        Typical asking price on gunbroker for a Colt 6920 is all of ~$50 more than the FN15, which is the closest equivalent that I can think of. Not a huge difference.

  • Oldtrader3

    I am disappointed in Colt having abandoned their retail customers in favor of military contracts. Now maybe they can see where it got them and take better care of the retail side? I have owned Colts for 50+ years. I would buy a SAA now if I could find one a near retail price?

  • John

    Colt need do what Ruger and Smith& Wesson has done for years provide good customer services with price people can afford. They need get R&D department come out with some new exciting people want own. Reason Ruger number one firearms company do well in America is because doing all those thing right.

    • Treyh007

      Well said sir, Ruger and S&W run a tight ship and they care what their customers have to say!

  • borekfk

    Does part of the deal include “Fire the current management team and focus on civilian sales.”?

  • Jay

    If they survive this time, they’ll be back in this position in 20 years. This is a gun company run by wall street people and retired high ranking generals, completely alien to the firearms business.
    Hope the deal doesn’t work, so they have to be sold to companies that actually care.

  • Jay

    As you can see all this maneuvers they do are done to save the equity owner, Sciens Capital Management, not the company. As long as the same morons own and run it, they’ll never turn the company around.
    They’ll just make some cuts and then milk it to the bone to recover their losses. If the deal fails, witch I hope it does, then it can be sold at auction, for what it’s actually worth, and someone actually interested in firearms can get it and start fresh.

  • jp2336

    They’ll be back in this same situation as they have shown. 1. Stop thinking your firearms are made of gold and diamonds and DROP the damn prices. Colt, you’re not THAT good and you’re NOT the only game in town. 2. Make them more available to consumers. 3. Change the Sr leadership as they have proven they are another bunch who don’t know what the hell they are doing.

    • John Doe

      With Colt miss management issues limited underwhelming product line up lack luster performance in civilian market I agree fully.

    • Cymond

      4. Produce something designed in this century.
      AR-15s variants, 1911s, and single-action revolvers aren’t enough.

  • Don Ward

    I just looked at the corporate catalog. There are four – FOUR! – revolvers offered. All SAA variants. All labeled “unavailable”.

    And Colt wonders why it is floundering.

    • Yeah, their product availability is crap. I’d check GunBroker if you’re looking for one of their guns.

      • Don Ward

        Well that’s the issue. Used Colt guns are highly sought after and collectible. They have a whole stable of revolvers and semi-autos that are part of their heritage. Instead Colt insists on sticking with the over-saturated 1911 and ARs for their sole civilian market.

  • Don Ward

    It’s not that hard.

    1. Paw through all the Colt Patents and old machinery.
    2. Restart the Colt-Burgess lever action rifle production line.
    3. ?
    4. Profit!

    • Oh, no! Then Winchester would be forced to retaliate by introducing William Mason’s 1883 prototype revolver.

      • Don Ward

        Shhhh. Don’t give away my Top Sekrit Plan!

  • ghost930

    The big problem? Lack of innovation. Don’t get me wrong, I’m a 1911 guy, and carried colts well in to the 90’s, and still have (according to my wife waaay to big) a large collection of Series 70’s and before 1911’s. But Colt just never could get themselves in to the latter half of the 20th century, and not at all in to the 21st century (double eagle, all American 2000, colt offensive pistol, etc, etc, etc.). I’m not sure what their problem was in finding innovative and market conscious engineers and gun designers but it has plagued them into the poor house more than once, and possibly for the last time. Although they do seem to come back more than the cast of the walking dead, so who knows? Just wish they would start coming out with some innovation like Sam Colt did when he first started this whole thing.

  • tazman66gt

    The same ones complaining about Colt’s product range would be the same ones complaining if they came out with a polymer striker fired firearm saying they lack creativity.

    • Or if they outsourced production to reduce their prices.

    • Spencerhut

      You’re probably right. But I’d like to think if Colt was a little more reasonable on the prices, that is they stop using high prices to try and fix their bad financial decisions they would be selling more. More people, including me would buy Colt branded Series 70 guns with modern features if the prices were comparable to say Springfield. But why would someone want a current production Delta Elite with it’s 1980’s design features at the silly price they sell them? $1100 for a poorly fit retro Delta or $1350 for a perfectly fit completely modern Dan Wesson 10mm?
      Colt is doomed if they don’t seriously rethink the product line.

  • Sulaco

    Colt lost me when they did the bait and switch with the Colt Magnum Carry snub revolvers. And that was a long time ago when they were in much better shape.