Colt Could Default on Multi-Million Dollar Payment This Year
Guns Save Lives is not supported by ads and is ran as an independent project. If you support this project please consider supporting us on Patreon. Registration takes just a moment and even $1 is a massive help in continuing our work. Thank you so much.
It looks like Colt might not be in the healthiest of situations. According to a WSJ report, the gun making giant is in danger of defaulting on a $10.9 million payment to bond holders.
From the WSJ:
Colt Defense LLC warned that it could default by the end of the year, as the privately owned company, which has suffered from declining demand for rifles and handguns, is likely to miss a payment to bondholders.
The gun maker faces a $10.9 million payment to bondholders Nov. 17, according to a filing on Wednesday with the U.S. Securities and Exchange Commission. If Colt skips the payment, it will enter a 30-day grace period, but without payment by Dec. 15 it will be in default and bondholders can demand immediate, full payment.
Colt, which is controlled by investment firm Sciens Capital Management LLC, had $248.8 million outstanding on the bonds as of June 29. The bonds were trading in the mid-30 cents on the dollar—deep in distressed territory—on Thursday.
While Colt has many lucrative government and law enforcement contracts it has started losing some ground in recent years to newcomers who are able to deliver mil-spec quality at a lower price.
In the consumer market few brands generate as much debate as Colt. While there is no question the company produces firearms of a very high quality, many consider them to be overprices, especially in a market that is flooded with affordable firearms this year.
Of course, current market conditions aren’t necessarily Colt’s fault. Over the last several months the gun industry has a whole has undergone a bit of a correction. The market was hot and heavy in 2013 as buyers grabbed every gun they could get their hands on as it was feared that new regulations would make it hard or impossible to obtain certain types of firearms. As it became clear that no new regulations were coming, the market was already saturated with too many firearms.
Regardless of Colt’s current status, we’re sure the iconic gunmaker won’t be going anywhere soon.