Colt secures $70 million loan to avoid default

Colt Defense LLC will not default on a major payment since it secured a new $70 million loan, according to Monday’s filing with the U.S. Securities and Exchange Commission.

The iconic Connecticut-based company said it will use the secured term loan from Morgan Stanley Senior Funding Inc. to make the $10.9 million interest payment to bondholders. Although due yesterday, Colt has until Dec. 15 to make the payment in full.

Colt said the new loan “will provide it with the time and flexibility necessary to support its medium and long term objectives.”

The cash injection will also go towards repaying all of the amounts outstanding under Colt’s existing $50 million term loan agreement from July 2013.

The new loan has similar provisions as the former but will mature Aug. 15, 2018, Colt said about the terms of the credit agreement.

The gun maker blames its financial woes on a continued decline in demand for rifles and handguns in the commercial market, and delays in government sales.