Colt warns of possible default, likely to miss $10.9 million payment

11/15/14 8:41 AM | by

With diminishing sales and unlikeliness of paying bondholders, Colt Defense, LLC warns of a bleak financial future.

The privately held company announced yesterday in a filing with the Securities and Exchange Commission possible default as it’s likely to miss a $10.9 million payment to bondholders on Nov. 17. If skipped, Colt has a 30-day grace period, but if it does not pay by Dec. 15 the company will be in default.

If a company defaults without first declaring bankruptcy, creditors will likely force it into bankruptcy and liquidate the assets or the company will operate under the shield of a bank, limiting major operational decisions.

Colt blames its financial woes on a continued decline in demand for rifles and handguns in the commercial market, and delays in government sales. The company reported in June a $20.5 million loss so far in 2014, down from a $9.5 million profit for the same time in 2013.

Like the iconic West Hartford, Connecticut, company, other gun makers have also seen a decline in demand. Smith & Wesson reported a net income of $14.6 million, down from $26.5 million for the quarter last year. Profits for the industry giant, Sturm, Ruger and Company, plunged 76.3 percent, from $28.6 million this time last year to $6.8 million for the past three months.

Latest Reviews

  • AKM

    Gun Review: Lee Armory AKM

    With a Lee Armory AK, there’s no frills, bells or whistles. The rifle will test your shooting abilities and you’ll...

    Read Now
  • M9

    The Beretta M9 Strong Even in Retirement

    The Beretta M9 withstood the test of time for our troops and LEOs, but with current trends shifting away from...

    Read Now
  • Rock Island Armory 1911

    Found on Guns.com: Rock Island Armory M1911

    While true believers tend to go after the standard .45 ACP models, Rock Island breaks the mold and offers a...

    Read Now
  • cloners

    Popular Rifle Builds for Cloners

    Cloners build rifles that closely resemble actual service weapons by carefully selecting components for an exact match for the most...

    Read Now