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Old April 15, 2015, 11:43 AM   #1
KyJim
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Colt seeks to restructure debt or possibly file Chpt 11 bankruptcy

From Colt's website:
Quote:
On April 14, 2015, Colt Defense LLC (“Colt” or the “Company”) and Colt Finance Corp. (“Colt Finance” and together with Colt, the “Issuers”) announced that they have commenced an exchange offer (the “Exchange Offer”) for their 8.75% Senior Notes due 2017 (the “Old Notes”) and related guarantees. . . .

The Exchange Offer will offer Colt’s and Colt Finance Corp.’s 10.0% Junior Priority Senior Secured Notes due 2023 (the “New Notes”) and related guarantees for any and all outstanding Old Notes. The New Notes will mature on November 15, 2023. ...
http://www.colt.com/ColtintheMedia/P...ansaction.aspx

Colt hopes this will save some interest payments, extend the maturity date on some of its notes, and enable it to better attract additional financing. It's not clear to me how converting 8.75 percent notes to 10 percent notes saves interest. Others with more acumen may understand.

Colt says that the deal is contingent upon 98 percent acceptance by those who own the notes affected. If they don't get it, they may file a "pre-packaged" Chapter 11 bankruptcy. Chapter 11 allows for reorganization of a business, including its debt, while keeping a business running. Colt would file the same proposal as its reorganization plan and it would cover 100 percent of the notes in question.

I don't think Colt's financial stress or it's intent to restructure its debt comes as any surprise. There was even a recent thread which included a review of Colt's troubles from the 1980s forward. Colt makes good firearms. I hope they can succeed.
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Old April 15, 2015, 04:40 PM   #2
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Quote:
Colt makes good firearms. I hope they can succeed.
I believe that should be modified to something along the lines of:
"Colt's Manufacturing can follow blueprints well, and manufacture third-party designs fairly decently. The rest of the company is hit-or-miss, depending upon which company they contract to do the work."




Colt needs to die.
Then, someone can resurrect the brand and do something decent with it. As-is, they're on a one-way trip to inevitable failure.
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Old April 15, 2015, 06:27 PM   #3
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If Colt can stay in business and make 1911s and AR-15s of the same quality they currently produce, then I'm all for it. I would be terribly concerned that if someone took over the brand, the quality of these guns would go down. Think Cerberus/Freedom Group taking over Bushmaster and Remington.
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Old April 15, 2015, 07:48 PM   #4
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Colt needs to die. They don't give a damn about American soldiers.
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Old April 15, 2015, 08:05 PM   #5
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It's their own fault. They thought they could thrive by getting lots of big government contracts and ignoring the gun buying public.
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Old April 15, 2015, 08:26 PM   #6
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Let's not forget the fiasco caused by the strikes.
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Old April 15, 2015, 09:12 PM   #7
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Quote:
If Colt can stay in business and make 1911s and AR-15s of the same quality they currently produce, then I'm all for it.
Actually, their 1911's aren't really competitive in the current market. A parkerized 1991 for $1000? Nope. There are equivalents at the $600 price point.

In terms of quality, I'm still seeing the same problems I've always seen: inconsistent finishes, picky feeding, and Colt's legendary disappearing sight paint.

And let's not forget Zilkha's contributions to Charles Schumer's office. No thanks. Let 'em die.
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Old April 15, 2015, 10:10 PM   #8
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I love my Colt 1911, it's not a Wilson or a Nighthawk but I would say it's every bit as good as a comparatively priced Kimber or Springfield Armory.

That said, what the heck? How can a company with such a huge contract mismanage it's finances bad enough to crumble like this?

I'd hate to see them disappear for good but if they did get bought out and came back with a little more interest in the civilian market that wouldn't be such a bad thing.
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Old April 15, 2015, 10:55 PM   #9
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Actually, their 1911's aren't really competitive in the current market. A parkerized 1991 for $1000? Nope. There are equivalents at the $600 price point.

In terms of quality, I'm still seeing the same problems I've always seen: inconsistent finishes, picky feeding, and Colt's legendary disappearing sight paint.
Where I buy some of my guns, a parked Colt 1911 is $731 today. http://www.budsgunshop.com/catalog/p...2B1+45ACP+5%22. The $600 competition are chock full of MIM parts and some of them dimensionally wrong. You see more than I do since you're in the business but the ones I have seen and bought have been fine. And, Colts are still American made which means something to some people.

I'm not saying Colt hasn't brought on most of their troubles themselves. But that doesn't mean the gun world is better off without Colt.
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Old April 15, 2015, 11:19 PM   #10
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Quote:
The $600 competition are chock full of MIM parts and some of them dimensionally wrong.
I would argue that that is an invalid argument, because....

Colts are full of MIM and cast parts, as well.
They've been using MIM parts since the '80s, slowly increasing the number of MIM parts as time went by. And, prior to MIM, they were using some sintered parts along side the cast items.


MIM parts only suck if the manufacturer doesn't tightly control their process. If the process is tightly controlled and closely monitored, MIM parts are fine.
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Old April 15, 2015, 11:21 PM   #11
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I think Colt is basically taking the same route that GM did. I too would like to see Colt come out of reorganization in good shape. Good for those who work there and good for those who do like their products i.e.> me.
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Old April 16, 2015, 12:45 AM   #12
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Quote:
But that doesn't mean the gun world is better off without Colt.
But is it better with them? I'm ambivalent, but I just don't see the point in paying a premium for a gun just because it's got the Hartford Horsie emblazoned on the slide.
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Old April 16, 2015, 03:00 AM   #13
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Honestly, the best thing for Colt might be if they were bought out. Colt has suffered from mismanagement for decades and they're still living in the shadow of it. As I understand it, their biggest problem today is that they simply don' t have the capital to invest in new machinery, R&D, etc. so they just keep on making three basic guns (1911's, SAA's, and AR-15's) because that's all they can afford to make.

If Colt were bought out by the right company (as in a successful firearms company) which was willing to spend some money on them, I think they could make a comeback. It seems to me that what they need is new management, renegotiation/elimination of some labor contracts, and a big injection of capital so that they can start making in the types of guns that sell, bring their QC up to adequate levels, and get their products in the dealers' cases.
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Old April 16, 2015, 03:27 AM   #14
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There are several Colts I would like to buy. None of them were manufactured after I was born three decades ago.
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Old April 16, 2015, 08:34 AM   #15
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Odds are they are heading to Chapter 11.

Will the new owners keep the company whole or sell off parts of it? Will they relocate - which solves the labor contract issues - or stay stuck in the present political climate?

Colt has a good background in desireable models but can they be made today for a competitive price and sell?

Who would buy them?

HK? Might solve their G36 issues by offering the M4 as a tainted replacement.

Berretta? Foothold in the American AR market with a good brand name.

FN? Eliminates a bidding competitor.

Norinco? Puts them back in the American market by getting around their agreement with Clinton.

Remington? With 7 million triggers to replace, maybe not.

Curious people want to know, time will tell.
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Old April 16, 2015, 10:25 AM   #16
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Quote:
Originally Posted by KyJim
Colt hopes this will save some interest payments, extend the maturity date on some of its notes, and enable it to better attract additional financing. It's not clear to me how converting 8.75 percent notes to 10 percent notes saves interest. Others with more acumen may understand.
It doesn't save interest; it saves cash in the short term. Say you have a mortgage on your house at 8.75% for a five year term. If you refinance that at 10% for a thirty year term, your monthly payment will go down, even if it has a balloon payment at five years. It's not a long tern solution unless revenue goes up or cost comes down -- or something changes.
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Old April 16, 2015, 10:41 AM   #17
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I look at Colt the same way I look at Rolex. Big name, big price but doesn't mean it works any better than other items costing a lot less.

No loss if they collapse.
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Old April 16, 2015, 02:24 PM   #18
KyJim
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Colts are full of MIM and cast parts, as well.
Nobody says anything about cast parts. MIM? Any sources that Colts are "full of MIM?" As far as I know, its the sear, disconnector, and mag catch.

BTW, I don't want to get into the endless debate of MIM versus non-MIM parts. Some 1911 folks don't like them and will pay extra not to have them. If you're not one of them, that's fine with me. That's the beauty of choices we have today. One less choice if Colt goes under.
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Old April 16, 2015, 02:26 PM   #19
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It doesn't save interest; it saves cash in the short term. Say you have a mortgage on your house at 8.75% for a five year term. If you refinance that at 10% for a thirty year term, your monthly payment will go down, even if it has a balloon payment at five years. It's not a long tern solution unless revenue goes up or cost comes down -- or something changes.
I understand that. I don't understand how Colt's press release claims it will save interest. That statement is so obviously suspect.
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Jim's Rules of Carry: 1. Any gun is better than no gun. 2. A gun that is reliable is better than a gun that is not. 3. A hole in the right place is better than a hole in the wrong place. 4. A bigger hole is a better hole.

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Old April 16, 2015, 02:29 PM   #20
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let them go. when was the last time they made several guns that a working man could afford?
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Old April 16, 2015, 02:30 PM   #21
KyJim
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when was the last time they made several guns that a working man could afford?
What do you think a working man can afford? BTW, I guess we should all hope HK, Freedom Arms, Korth, Wlson, Ed Brown, Les Baer, Dan Wesson, Noveske, LMT, Daniel Defense and others all bite the dust because firearms should only be made at "working man" prices. All those companies manufacture guns which are all, or almost all, more expensive than Colt.
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Old April 16, 2015, 02:52 PM   #22
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Some "working" folks obviously make more than others. Some folks still expect that no gun should cost more than XXX dollars and others wouldn't buy a gun unless it cost XXX +YYY dollars (implied quality). I have a Colt my dad used as off duty gun. IF it is a DS (and it looks like it) it was a first year model so I suspect he bought it from a retiring cop. Nice gun, but I wouldn't pay the current prices for any other Colt handgun,
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Old April 16, 2015, 02:52 PM   #23
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I wish they would declare Chapter 7 bankruptcy. The Colt brand alone has substantial goodwill value. I would love to own the Colt brand. I would certainly bid.
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Old April 16, 2015, 03:00 PM   #24
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makers of high priced guns are able to find and survive the market, colt isn't able to do that. since they cant compete in the high dollar market you would think they would focus on the growing modest income gun buyers.... its fairly simple, you cant make a 1911 worth $600 and try to sell it for $1,000.
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Old April 16, 2015, 03:17 PM   #25
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you would think they would focus on the growing modest income gun buyers.
They made a very public decision several years ago to "ignore" the sporting market and focus on government contracts.
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