Gun maker that won the West goes bankrupt after 179 years: Colt Defense files for Chapter 11 protection after sales drop
- The creator of the 'gun that won the West' made the announcement late on Sunday
- The 179-year-old gun maker initiated voluntary chapter 11 filing after creditors rejected an appeal to restructure its debt
- Colt said it will continue normal business operations with no impact on customers, suppliers, vendors and employees
U.S. legendary gun maker Colt Defense LLC announced it filed for Chapter 11 bankruptcy protection late Sunday due to weak popular sales and government orders.
The 179-year-old creator of 'the gun that won the West' said it initiated the voluntary chapter 11 filing after creditors rejected an appeal to restructure its debt.
Its current sponsor, Sciens Capital Management LLC, agreed to act as a 'stalking horse' bidder, Colt said.
Colt also said it intended to continue normal business operations through the accelerated sale process with the help of $20 million in credit facilities that its existing lenders have agreed to provide.
U.S. gun maker Colt Defense LLC announced it filed for Chapter 11 bankruptcy protection late Sunday (above Ronald Reagan with a Colt revolver)
In its filing, the company estimated that it owes up to $500 million to up to 50 creditors. It also listed assets of up to $500 million (above factory engraved Colt revolvers from 1873-1940)
Colt said its current sponsor, Sciens Capital Management LLC, agreed to act as a 'stalking horse' bidder (above a soldier holding a US Army colt automatic .45 caliber pistol)
In its filing, Colt estimated that it owes up to $500 million to up to 50 creditors.
The company, which makes recreational guns as well as the M4 and M16 military rifles, also listed assets of up to $500 million.
'The plan we are announcing and have filed today will allow Colt to restructure its balance sheet while meeting all of its obligations to customers, vendors, suppliers and employees and providing for maximum continuity in the Company's current and future business operations,' said Keith Maib, Chief Restructuring Officer of Colt Defense LLC.
'While entering Chapter 11 protection in the absence of a consensual agreement with our noteholders was not our preference and we do not take it lightly, we are confident it is the best path going forward and will enable us to continue to gain traction on a challenging but achievable turnaround in our business performance and competitive positioning in the international, U.S. government and consumer marketplaces.'
Colt said it intended to continue normal business operations through the accelerated sale process with the help of $20 million in credit facilities that its existing lenders have agreed to provide (above Mark Heitz of Tactical Firearms in New Hampshire looks over a civilian version of the Colt M4 carbine)
The 179-year-old gun maker manufactures recreational guns as well as the M4 and M16 military rifles (above Fine Vintage 1855 Colt model 1849 .31 Cal. Pocket Revolver)
Sciens Capital proposed to buy all of Colt's assets and assume secured liabilities and those related to employees, customers, vendors, and trade creditors, Colt said in a statement.
Sales of Colt's modern sports rifles and handguns fell 30 per cent last year and cash dwindled to $11.1 million by May 22, according to regulatory filings.
Colt Defense, whose M1911 was the primary sidearm for the U.S. military for most of last century, missed a $10.9 million payment last month to holders of $250 million in its senior bonds.
The gun maker warned bondholders in April of 'increasing liquidity challenges as a result of several recent business trends.'
Colt, which dates back to 1836, when inventor Samuel Colt (left) revolutionized the firearms world by creating the first revolver, warned in bondholders in April of 'increasing liquidity challenges as a result of several recent business trends' (pictured right the Colt factory in 1857)
These trends included a drop in demand for Colt handguns and delays in the timing of US government sales, including foreign military sales through the US government.
The current management team led by President and CEO Dennis Veilleux will remain in place throughout the process which is expected to be completed within 60 to 90 days, Colt said.
Perella Weinberg Partners L.P. served as financial advisor to the company, while Mackinac Partners LLC served as the restructuring advisor.
Colt dates back to 1836 when inventor Samuel Colt revolutionized the firearms world by creating the first revolver.
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