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fishweewee

If you're looking to buy any Colt stuff ...

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Do it now.

 

Company is teetering on the edge of bankruptcy.

 

http://www.sec.gov/Archives/edgar/data/1508677/000110465914079873/a14-24362_1nt10q.htm

 

 

Colt Defense LLC (the “Company”) is unable to file the subject report in a timely manner because the Company is working through accounting considerations and liquidity concerns with respect to its financial operations. As a result of several recent business trends negatively impacting the Company’s current and forecasted revenues and cash flows, the Company is evaluating its forecasted operating cash flows in consideration of recent delays in product shipments and availability of borrowings under the Company’s Credit Agreement. As of this filing, the Company believes that it is probable that it will not be in compliance with its Term Loan covenants, as amended, as of December 31, 2014 as they currently exist absent an amendment, waiver or refinancing of the Term Loan Facility. The Company is in current discussions with existing and potential financing sources to address the situation as discussed below in Part IV.

 

 

Bonds are trading at $0.45 on the dollar.

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Quote:

Originally Posted by Sudsy View Post

With demand through the roof - how can this happen ?? cwm13.gif



It makes you wonder what orifice the management has head their heads up for a decade or two,the market is full of AR and 1911 type products,yet Colt couldn't get the job done.



All they had to do was build a quality AR15 and a 1911,they would have sold every one they could make.


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Colt's problems are largely due to management.

 

In 2003 the company was split into two companies - Colt Defense LLC (M16 rifles) and Colt's Manufacturing (1911 pistols and SAA revolvers).

 

This was to shield the defense contractor from anti-gun lawsuits that were a carryover from the Clinton administration.

 

Anyways, one the owners of the of Colt Defense (Blackstone Group) stipulated that Colt Defense couldn't sell rifles to civilians.

 

So the rifle Company was set up as a defense contractor. When Colt lost the Army M4 contract a few years ago, that turned into a recipe for disaster.

 

Colt Defense and Colt's Manufacturing were reunited earlier this year, and Blackstone's stake was bought out.

 

The combined company has a large debt load relative to its net worth. The Colt trademarket is worth $50 million, the physical plants are worth ~$20 million, but the company has $300 million in debt.

 

This debt was incurred when the private equity owners did a dividend recap and sucked all the cash out of the company.

 

Colt has a lot of problems. Because of restriction imposed by the owners, it wasn't able to take advantage of black rifle demand after Sandy Hook.

 

It has an aging union (=expensive) work force which makes it uncompetitive.

 

I've been in the factory. It's a dinosaur, with some of the tooling over a hundred years old. So it isn't as efficient as it could be. They have two robots that machine the aluminum billet into lower receivers. The union guys keep trying to sabotage the robots. So they are fenced off.

 

It's also hamstringed by the fact that it has only two products. M4 rifles and 1911 pistols. Both are in the $1,000 price point range.

 

I was told they'd have a polymer frame pistol (designed by a Glock engineer) at a $500 price point this year, but it looks like they won't have enough cash to bring it to market.

 

Bad luck all around.

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Bubbits worked for Glock and later on Steyr, right?

 

Yes, my understanding is he was one of (if not) the original designers of the Glock 17. He also designed the The Steyr M series, the Walther PPS, and the Caracal auto pistols.

 

 

:v:

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