Refinanced Colt Walks Away from $1m FL Building Deal

Colt M4 (courtesy armoryblog.com)

“Governor Rick Scott announced in 2011 that Colt was bringing 60 high-paying jobs to Kissimmee and would occupy a building that cost taxpayers $1 million,” wftv.com reports. “‘I called the company to make sure they were coming,’ Scott said in 2011. But Colt never came to central Florida and the building still sits empty more than two years later, angering taxpayers and job seekers . . . The county is drafting a notice of default letter to Colt. It’s the first step towards evicting the company from the building.” This following news that Colt made a last-minute deal to save its skin. According to thedeal.com . . .

The refinancing climate is so good for middle-market companies that one of them, Colt Defense LLC, announced a refinancing on the same November day an interest payment was due.

The West Hartford, Conn., firearms manufacturer, which is majority-owned by New York private equity firm Sciens Capital Management Group, secured on Nov. 17 a new $70 million loan from Morgan Stanley Senior Funding Inc., allowing it to make a $10.9 million interest payment that same day on its $250 million in senior unsecured notes due Nov. 15, 2017.

Colt had warned on Nov. 12 that it didn’t have the funds to make the interest payment and that it was facing a covenant breach on its $50 million senior secured term loan from Cortland Capital Market Services LLC. The new financing allowed Colt to make the interest payment and repay its term loan before the covenant violation.

Which is all well and good, but one wonders how the storied firearms manufacturer can take in more money than it spends, what with the general slump in the U.S. gun biz and America’s shrinking commitment to overseas adventures. Back in May, when the downturn hit home, Colt’s first quarter revenue fell 22 percent to $50m. The company suffered a $7.8m loss for the period.

As finance.townhall.com pointed out last summer, Colt’s flirtation with bankruptcy is nothing new. Nor is its over-reliance on crony capitalism (i.e. government contracts). Moving forward, the Connecticut company’s going to have to find a way to connect with consumers. Good luck with that. No seriously. Good luck. [h/t SS]

comments

  1. avatar Chip Bennett says:

    So, is the point of the accompanying picture that Colt are making financial asses of themselves?

    1. avatar Accur81 says:

      The picture is flippin’ awesome, it doesn’t need to make a point.

      1. avatar Phil COV says:

        Oh I think it made a… ahem… “point.”

        1. avatar LarryinTX says:

          Those are Israelis, right?

        2. avatar Ralph says:

          Those are Israelis, right?

          They’re tushies. Cute tushies. With guns.

      2. avatar Turner92 says:

        I’d load that magwell with my rounds.

    2. avatar Curtis in IL says:

      I gotta agree with Accur81 on this one.

  2. avatar JohnO says:

    I’d like to find one of those accessories to bolt to the side of my AR!!!

    1. avatar RT says:

      That’s the only way a Colt AR would be worth what they want for them.

      1. avatar Sean says:

        I dunno man, I’d be willing to pay a pretty penny for an A1 Carbine…

    2. avatar Herb says:

      If that photo was taken anyplace other than Israel, I’ll eat my….hat.

      There are lots of pix of IDF girl soldiers on leave with M-16’s switching across their butt; that’s the first I’ve seen with her clutching a magazine.

      She must be on Defcon 3.

      1. avatar Curtis in IL says:

        Do they slap the magazine in when they go to Defcon 2?

      2. avatar Sian says:

        Look at all the wear. That thing’s got a lot of miles on it. (the rifle not the girl) Gotta be IDF issue.

        1. avatar Curtis in IL says:

          If you were rubbing against that girls rear end every day, you’d have some wear and tear, too.

  3. avatar D-FENS says:

    Just let Colt die and go away already. This company has been limping along for decades. Every other gun company was making money by the truck full during the boom and Colt completely fails to capitalize on the sales surge. Unbelievably ineptly run company that shouldn’t be loaned another dollar.

    1. avatar Cogitans says:

      Agreed, some entrepreneur or company will by the rights to the Colt name and bring it back the way it should be.

      1. avatar Jeremy S says:

        They have been licensing their name to other companies for a while now. If you want to use the Colt name and logo, you likely can. Colt Competition, Colt rimfire replicas by Walther/Umarex, Colt ammo (AFAIK it’s licensed out… match stuff is loaded by Black Hills and steel cased stuff is by Barnaul in Russia)…

      2. BCM comes to mind as the player who would be a natural for that kind of rebranding, but here’s my dark horse pick for the best player to grab up Colt’s assets: CMMG.

        CMMG has been one of the most innovative players in the AR-15 space, and they put out what is usually a pretty good product. I think that a more recognizable brand plus the equipment needed to enter the 1911 and bolt gun markets would be pretty big for them. I also think they would do a far better job of developing the 901 platform.

        Now, I don’t know if CMMG has cash on hand to pull off a stunt like that… probably not. But CMMG’s history of innovation accompanied by Colt’s more varied product lines could be a big win for an investor.

        1. avatar Mark N. says:

          Who’d want to take on $300 million in debt for a shell of a company and a few modern tools? Instead, it would be smarter to buy name out of bankruptcy and avoid the debt.

        2. avatar neiowa says:

          Well it guess is the their current/new money has realized that WallStreet “equities” in the age of Obuma actually generally aren’t and are taking a “defense” position. World crashes Colt might have intrenstic value/be worthsomething where google and it’s “advertising scam isn’t and won’t have real valve.

        3. Sorry I didn’t make it clear, Mark: duh, you wait for bankruptcy first.

  4. avatar MurrDog says:

    The sooner they go under, the better.

  5. avatar Tom in Oregon says:

    Bring back the Python.

    1. avatar Avid Reader says:

      If I keep looking at that picture, it might bring back mine. . .

      1. avatar 357M28 says:

        In stainless steel….

        1. avatar dph says:

          ….no, blue steel.

      2. avatar Avid Reader says:

        I don’t care as long as it’s at least the six inch barrel. . .

  6. avatar Spectre_USA says:

    My BIL just sold a Python in Cali for enough to buy a Smith 460.

    He had to hussle though, as the 460 was on their latest “list.”

    I am so glad I moved out of that state a couple decades ago…

  7. avatar BradN says:

    It would be great to see Colt rebound and introduce a new plastic fantastic to compete with the big boys. Somebody slap them in the face and get some sense going on around there.

    1. avatar Jeremy S says:

      They do have the Mustang in a polymer frame, but it’s too expensive to be popular (IMHO). They could expand out of 1911s for pistols and get into something more competitive with a higher profit margin. The bolt action rifles look sweet and the new modular AR that is native in .308 but accepts 5.56 uppers w/ an adapter is cool… I just haven’t heard a peep about either. Maybe marketing is falling flat also. They’d have to promote their products but also working on changing the image of the brand. I think a lot of folks find it old and stodgy and a tad behind the times, plus they’re still really proud of that Colt logo, which makes Colt products more expensive than perfectly competitive products from other brands.

      1. avatar BradN says:

        I’ve heard good things about the Mustang but I’m ready to see a non-1911 full size and compact series of pistols from them. Preferably polymer framed and striker fired. It’s way overdue for them to toss their hat in the ring. Considering the history behind the brand I find it quite odd they’re so behind everyone else.

  8. avatar Matt in FL says:

    Would have been nice to see that facility down this way.

    1. avatar Geoff PR says:

      Good to see you back, Matt.

      Will the Daily Digest grace us with its presence soon?

  9. avatar Paul53 says:

    Off topic, but we fought a revolution against tyranny. Why do we tolerate them now in Kalifornia and Massachusetts (birthplace of the American Revolution, and more importantly, me). Love El Paso though!

    1. avatar Barstow Cowboy says:

      Because TV/sports/internet.

  10. avatar Forrestt C. says:

    Wait, there was a gun in that picture?

  11. avatar DrewR55 says:

    My Colt 1991A1 has a special place in my safe but it is high time Colt offers their LE6920 for -$650 and the 1991A1 for about the same. It is also time that they introduce modern firearms into their line for reasonable prices.

    I should be able to find a Colt logo single stack alloy framed compact 9mm for $500 and a double stack polymer striker for the same.

    Heck, since Colt leased Sig the Mustang .380 the should lease the P225 back from Sig.

    1. avatar Mark N. says:

      Colt did not lease the Mustang to Sig. Colt stopped producing them, and its patents expired. Sig saw an opportunity in the CCW market and was successful with a multiplicity of models, so you can get the look you want. Colt? Colt came late to the party, true, with a new CNC machining capacity, but at first only a single gun in a single style. Then they came out with the very ugly polymer version. But nothing like what Sig has done. Then Sig took it to another level with the P938. Colt is still sitting on its haunches.

  12. avatar Xanderbach says:

    Read the thread linked under that picture… Ouch. While gun nuts may be okay with a Colt “dinged from the factory”… Your standard AR buyer isn’t going to buy a rough-finished AR for a premium just because there is a pony on the side of it. Unless they’re bronies, of course…

  13. avatar John Butler says:

    For decades, Colt has bet the farm on government contracts, and it is biting them firmly in the @$$. Since the Cold War ended, basing you business model on selling to the gubmint when you deal in small arms is patently stupid. There’s a backlog of perfectly serviceable arms already in the inventory and there hasn’t been a major shift in small arms doctrine or technology since everybody went to select fire rifles in intermediate calibers.

    Civilian sales to the masses is where the money is now, which Ruger has always believed, and it has allowed them to become the 800 lb gorrila of the US firearms industry. Ruger keeps select stalwarts, like their single and double action revolvers, in the catalog, while throwing new ideas and innovtions at the wall to see what sticks.

    Sometimes those ideas work (LCP, LCR, .454 Casull Super Redhawk), and sometimes they fall on their face and dissapear (.480 Super Redhawk, .327 Federal SP101, GP100 and Blackhawk, the first Charger pistol). The point being that Ruger has a solid base of products at a reasonable price that people want to buy.

    Colt, on the other hand, has its 1911 line, which is at the upper end, price wise, in a sea of inexpensive good quality handguns. It has its AR line, again, in a sea of knock offs of variable price and quality all the way from Bushmaster Beaters to high end Noveske. There’s also their Custom Department that makes the 1873 Single Action Army to order. Again, there are plenty of copies and knockoffs of the Peacemaker. And to add insult to injury, Ruger has the Blackhawk and Vaquero, which are “improved” versions of the SAA. And the Colt Mustang is copied in the form of the SIG 238.

    There is literally nothing that Colt makes that isn’t made cheaper or better, or sometimes both at once, by somebody else. Meanwhile, Ruger, and just about every other manufacturer has distinctive designs that they gaurd jealously. Ruger will sue the Hades out of you if you make a copy of one of their trademarked guns. Keltek sued the carp out of Ruger for stealing the poly pocket .380 design from them, and won.

    Since the horse isn’t quite hamburger yet, I’ll belabor the point. Colt has bet their existence on a shrinking military selling the same damned weapon system for half a century, and haven’t produced anything original or distinct that was successful for the civilian market. With the cancelation of the Python .357 Revolver in 2003, the only reason to buy a Colt is for the name, and the fading history that goes with it.

    And that isn’t enough to sustain a company on.

    1. avatar Mark N. says:

      I completely agree. I would like to have aM1911A1–from around 1943–just because it says Colt on it, as well as an authentic Colt 1873. But as to the latter, the Italian reproductions are half (or less) as much money, and can be bought in the original version or updated with modern tech. Colt is still using the same design patented in 1872 and last updated for smokeless the 1890s–and charging a premium simply because it says Colt on it. The Mustang was recovered from the dustbin and produced on new machinery–the only new machinery Colt has purchased in decades. Colt does not currently offer a single innovative or new product. Period. It cannot continue to rest on its laurels and history.

  14. avatar Anon in CT says:

    With a debt load in excess of $300mm, there are few if any gun companies who could make the acquisition and assume that debt load. Gun companies just aren’t very big, though of course some are part of larger conglomerates. Look for someone to buy the good IP and equipment in a 363 sale.

    1. avatar John Butler says:

      Part of Ruger’s success is that they are also Pine Tree Casting, one of the largest industrial investment casting companies in the US. Love him or hate him, Bill Ruger knew better than to bet all his money on one horse.

      And also related, given Colt’s loud announcement of their move to the Gunshine State and subsequent retraction, Sturm, Ruger and Co. are now headquartered in New Port New, Hampshire. They already had an investment casting facility there, and have apparently moved the firearms manufacturing side of things there as well, without making a big fuss about it. They just left Southport, Connecticut, taking their workers and the tax base that came with the business, with them.

      1. avatar uncle fester says:

        The high debt is part of the LBO strategy that private equity companies use to make money. If it works, they will use tha cash flow to pay down the interest before flipping it out to the public or another buyer. If it does work, the company will file for bankruptcy and the lenders will own the company.

        If they had any brains, they would spin out a second company to make revolvers for the public. The second company could build them for a profit in a lower cost state.

  15. avatar Tom W. says:

    Well, if it really wanted to take the first step to “re-connecting” with the civilian market it blew off while sucking on the .gov teet, it would get the (insert expletive) out of CT! Downsize, streamline, fire the quisling clowns resting on the Colt laurels, meet folks, talk to folks, go send savvy reps to small town gun shows, not just annual conventions, find out somethings and make them in Florida. Damn FL rolled out the red carpet for you and your acting like your too good since you acquired another loan, to string you along hoping for a sucker buyer.
    I own two Colt pistols BTW, an inherited Mustang, and .22 Target. Both were from a galaxy far far away it seems as they are fine examples of what was!

  16. avatar Tomyironmane says:

    Their debt load is ruinous and their logo isn’t worth that much. In my time looking I never saw anything that you could get from Colt that you couldn’t get the same, if not better thing, for a thousand dollars less, from Smith & Wesson. Having “Colt” stamped on the side isn’t worth that $1,000.

  17. avatar ghost says:

    Nice rifle, get in the truck.

  18. avatar Bob says:

    I think colt spent too much time selling to the .gov and dropping things we want to buy (Python).

    I mean when you say colt the first thing that comes to mind is the Python and then maybe overpriced ARs. Hand I cnat buy a Python from colt. Having a poorly featured AR for a premium vs other mfgrs, without really really selling the potential quality thing, just isn’t going to work.

  19. avatar S.CROCK says:

    That receiver though.

  20. avatar Steve Kaiser says:

    Colt has been living off their past reputation. The Python was a fantastic weapon, but I understand, to much hand labor went into it. I read somewhere, that’s why they dropped it. I was looking at the Defender, but I bought a S&W M&P instead. The Defender was about a thirty percent more in price. I could not justify the extra cost. Simply put, NO VALUE ADDED. I’m not alone on this, other people are noticing this. Question I have is why? Hasn’t Colt placed automatic machining in place? Maybe they need new aggressive management. The management they have now sure isn’t doing their job.

  21. Super…….excited…..

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