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Found out this morning that Colt Defense filed for chapter 11 bankruptcy.
Colt Defense Files for Chapter 11 Bankruptcy Protection - WSJ

Gun maker Colt Defense LLC said late Sunday it is filing for chapter 11 bankruptcy-court protection, amid business-execution issues and a heavy debt burden.

The company has secured $20 million in financing from its existing senior lenders to continue operating while in bankruptcy and expects to remain in business after the restructuring.

The West Hartford, Conn., company, with a legacy dating to 19th century New England, developed a pistol it calls “the gun that won the West” and enjoyed a lucrative stretch in the late 1990s and early 2000s as supplier to the U.S. military of the M4 line of firearms widely used by front-line troops.

But Colt has struggled in recent years with supply-chain and working capital issues, a slowdown in rifle sales and its 2013 loss of a key contract to supply the U.S. Army with the M4. As a result of some of its operational issues, the company has had accounting problems that caused it to revise prior years’ reported financial results and miss a creditor’s initial filing deadline for an annual report, according to regulatory filings.

Colt plans to try to reduce its $355 million debt burden via a court-supervised auction of its business, to generate proceeds to repay some of its lenders.

Colt has selected its private-equity backer, Sciens Management LLC, as the “stalking horse”—or lead bidder—in the sale.

As its cash dwindled, Colt spent much of the past year seeking financing and angling for better terms and restructuring-plan support from creditors.

It tried to win bondholders’ backing for a debt-for-debt exchange or a “prepackaged bankruptcy” filing that could have smoothed its trip through chapter 11. But bondholders balked at the deals, either of which would have slashed the amount the company owed them. As of June 1, just 5.9% of bondholders had registered their support for Colt’s proposal, according to the company.

Colt borrowed $70 million from Morgan Stanley last year to pay interest on its bonds, and in February it warned it might not have enough cash to make an interest payment by a June 15 deadline. This year it struck a $33 million refinancing deal with hedge fund Marblegate Asset Management LLC that also freed up some additional liquidity, according to filings.

Ultimately, it failed to turn its performance around or negotiate a deal with all its creditors before Monday’s payment deadline, people familiar with the matter said, setting up a default.

Colt traces its roots to New England inventor and industrialist Samuel Colt, a pioneer in the mass production of the revolver who opened his first plant in Paterson, N.J., in 1836, according to the company’s website.

Its fortunes have ebbed and flowed over the years, including a previous trip through chapter 11 bankruptcy, from which it emerged in 1994.

Sciens Management recently owned 87% of the company, according to a regulatory filing. Some of Sciens’s principals own stakes in the owner of its West Hartford facility, which has a lease expiring in October.
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