Clinging to the edge, Colt Defense entered into a waiver agreement Tuesday with creditors to avoid defaulting on a loan.
According to Colt’s loan agreement with Cortland Capital Market Services LLC, if Colt fails to deliver its annual financial statements for fiscal year 2014 it constitutes an event of default under the terms of the agreement.
Charting a course for another rocky year, Colt last week deferred submitting its annual report to the Securities and Exchange Commission. The Connecticut-based company explained there were miscalculations in its employee retirement pension filed earlier this year.
“Pension benefits for certain retirees that were hourly employees covered by the “Colt Retirement Defined Benefit Plan” have been calculated incorrectly since the inception of the pension plan in 1990,” Colt said in the filing, adding the liabilities attributed to the program were understated by $4 to $4.5 million.
The ailing company retained the services of a financial restructuring adviser, Mackinac Partners, in March to the tune of $150,000 per month for an unspecific amount of time. In return, Mackinac will review and analyze Colt’s financial results, projections and operational data.
Colt’s financial health has had a sharp decline since the industry as a whole has been coming down from a surge in sales in 2013.
Earlier this year, Colt secured the $33 million loan but said it still may miss next month’s semi-annual $10.9 million senior notes interest payment, something it barely made in November.
In 2014’s third quarter, Colt reported a net loss of $7.8 million, down from $11.3 million profit in 2013. Net losses nine months into 2014 come at $28.4 million, down from a $20.4 million profit in the same timeframe the year before.