Shooting Sports Retailer has learned that a Delaware judge approved Colt Defense LLC’s amended plan to emerge from Chapter 11 proceedings, allowing the company to focus on its core firearms manufacturing business with a new financial plan.
In a statement sent to SSR, the company said it has “has completed its financial restructuring” in which Colt “reduced its debt, improved its capital structure, and enhanced its liquidity profile. Specifically, the Company has reduced its debt by approximately $200 million, after giving effect to $50 million of new capital raised through the restructuring process.”
But it was a deal Colt won by the hair of its teeth, according to the Wall Street Journal, after its top financial stakeholder Sciens Capitol was unable to come up with a promised $15 million in cash in December. Sciens also requested terms that would shield it from any litigation from investors who hold about $250 million in bonds with Colt — bonds the struggling company couldn’t pay back, thus forcing it into Chapter 11 in the first place.
Creditors had criticized the private-equity firm for draining cash out of the company, leaving it without research and development funding to stay competitive. Sciens denied the allegations.
According to the Journal story, the bond holders’ lawyer said he’d basically take a bad deal rather than no deal at all.
“This is a true testament to the hard work and support of our dedicated employees, as well as an affirmation of a shared confidence among our key stakeholders and creditors that Colt is on the right path,” said Dennis Veilleux, President and Chief Executive Officer of Colt Defense LLC. “We are grateful for their commitment to Colt and we look forward to the future as we build on our heritage as an iconic American brand with renewed vigor and purpose.”
The bankruptcy deal comes as Colt is poised to launch several new products at the annual Shooting, Hunting and Outdoor trade show in Las Vegas, including an entry-priced AR-15 and new 1911-style handguns.