Colt Defense in financial trouble (again)

[LittleLebowski]

http://www.sec.gov/Archives/edgar/data/1508677/000110465914079873/a14-24362_1nt10q.htm



"If the Company is unable to service its near term Senior Notes interest payment due on November 17, 2014, the Company has a contractual grace period through December 15, 2014 to make the Senior Notes interest payment. If the Company does not make the Senior Notes interest payment by December 15, 2014, the Company will be in default with its obligations under the Indenture. Even if the Company does make its Senior Notes interest payment by December 15, 2014 it is probable that the Company will not be in compliance with the Company’s Term Loan covenants, as amended, at December 31, 2014. The failure to comply with the Company’s Term Loan covenants, as amended, would cause an event of default under the Credit Agreement and the Senior Notes.

"As a result of these factors, the Company expects that all of the Company’s long-term debt will be classified as current in the consolidated balance sheet as of September 28, 2014 when the Company reports its third quarter results. The Company does not have sufficient funds to repay all of its debt upon an actual acceleration of maturity. Since the Company would be unable to repay its debt obligations upon an acceleration of maturity the Company’s lenders would likely take actions to secure their position as creditors and to mitigate their potential risks. These conditions would adversely impact the Company’s liquidity, and raise substantial doubt about the Company’s ability to continue as a going concern."

[GardoneVT]

http://www.sec.gov/Archives/edgar/data/1508677/000110465914079873/a14-24362_1nt10q.htm

It sounds more dire then it is. True, missing the payment is bad, but they still have 3 days to make the first deadline and over a month to meet the second. If the company can't make the note in December, odds are the loan lender will arrange alternative payment options-if Colt goes bust the lender waits in line with other creditors in bankruptcy court and has to pay legal expenses in the process, so its in everyone's best interest to play nice.

Theyve already arranged a deal with the lender as of June 2014 according to the SEC 10-Q. I woundnt be concerned .From the 10-Q:

"On August 6, 2014, the Company entered into Amendment No. 1 to the Term Loan (the “Term Loan Amendment”). Absent an amendment to the Term Loan, the Company would have been in violation of certain of its financial covenants as of June 29, 2014. The Term Loan Amendment is discussed in more detail in the following paragraph. The Company was in compliance with its Term Loan covenants, as amended, as of June 29, 2014 and December 31, 2013. It is possible the Company will not meet one or more of the Term Loan covenants, as amended, as of December 31, 2014, or subsequent quarters of 2015. If the Company were not to meet certain of the Term Loan covenants, as amended, in the future, the Company would likely seek a waiver from the Term Loan lenders. There is no assurance that such a waiver could be obtained from the Term Loan lenders in a timely basis, or at all, in which case the Company would be in default under the Term Loan and the Term Loan would become a current liability."

[idahojess]

And they're out. Sort of:
http://www.courant.com/business/hc-colt-defense-west-hartford-connecticut-new-loan-20141118-story.html

I thought this quote was interesting:
Colt Defense LLC reunited its military and civilian handgun businesses in July 2013 with a $60.5 million acquisition of Colt Manufacturing Co., a decade after they were split apart. At the time of the merger, it was carrying $250 million in debt.