More Bad news from Colt

[Sergei Mosin]

Just ordered a Lightweight Government for about $800. Colts are definitely getting more affordable.

 

[wojownik]

Colt is trying to set up a long term plan to fund the company thru 2023.

What Colt is trying to do is to get its bond holders to agree to something very unpalatable. Colt currently has hundreds of millions in bonds coming due in 2017. What it wants to do is get its current bondholders to take an uptier exchange at deeply distressed levels into new 10% junior-lien notes due 2023. A deep discount off of par value. VERY deep discount. As I noted earlier in the thread, that means giving bondholders a higher interest rate, but cutting their par value down by 65%-75%!

So, if you have a $1000 Colt bond coming due in 2017, they want you to trade that for a $350 bond coming due in 2023, albeit paying you a higher interest rate.

The unsaid "threat" is that if you don't agree to taking a 65% haircut now, you might get zero in 2017 'cuz we'll be bankrupt.

Unsurprisingly, only 5% of Colt's bondholders have agreed to these terms.

Again, as I noted earlier, its more typical for a company to actually discuss terms like these BEFORE you spring it formally. Just a mind-blowingly bad approach, IMHO.

 

[Aragon]

What Colt is trying to do is to get its bond holders to agree to something very unpalatable. Colt currently has hundreds of millions in bonds coming due in 2017. What it wants to do is get its current bondholders to take an uptier exchange at deeply distressed levels into new 10% junior-lien notes due 2023. A deep discount off of par value. VERY deep discount. As I noted earlier in the thread, that means giving bondholders a higher interest rate, but cutting their par value down by 65%-75%!

So, if you have a $1000 Colt bond coming due in 2017, they want you to trade that for a $350 bond coming due in 2023, albeit paying you a higher interest rate.

The unsaid "threat" is that if you don't agree to taking a 65% haircut now, you might get zero in 2017 'cuz we'll be bankrupt.

Unsurprisingly, only 5% of Colt's bondholders have agreed to these terms.

Again, as I noted earlier, its more typical for a company to actually discuss terms like these BEFORE you spring it formally. Just a mind-blowingly bad approach, IMHO.

I would like to know how these bondholders are subordinate to Morgan Stanley? Is whatever is securing Morgan's money somehow legally discrete from the balance of Colt's Firearms LLC?

I realize there is a pecking order if a company ultimately goes through bankruptcy, but Morgan was very late to the game. It's almost as if Colt sold something (trademarks?) to Morgan rather than actually lending them money on it.

 

[wojownik]

I would like to know how these bondholders are subordinate to Morgan Stanley? Is whatever is securing Morgan's money somehow legally discrete from the balance of Colt's Firearms LLC?

I realize there is a pecking order if a company ultimately goes through bankruptcy, but Morgan was very late to the game. It's almost as if Colt sold something (trademarks?) to Morgan rather than actually lending them money on it.

That's an easy one. Bonds are generally unsecured debt. Colt has at least two secured debt arrangements one of which is Morgan Stanley - in addition to a ton of unsecured bonds.

Debt secured by a company's assets come before any unsecured creditors, including bondholders.

It's not a matter of first in, first out. It's a matter of structure.

Which is probably part of the reason why Colt is trying to squeeze the bondholders. On the one hand something has to give because the bond that is just too massive for the company to service, as is. On the other hand, Morgan Stanley and others have their debts secured by the company's assets - they have serious leverage over the company compared to the bond holders.

 

[Al Thompson]

As a member pointed out to me, this is yet another "business 101" thread, not in THR's mission statement.

 

[Panzerschwein]

Colt is going nowhere.

The name as a gun company will not die in our lifetimes. I imagine it will be bought up by some overseas venture, the guns will have that pretty, oh so pretty little pony on the side... but they won't be a real Colt.

 

[RustyShackelford]

The real truth ....

The sad fact and real truth is that in 2015, if you want a high quality 1911a1 pistol that's hand fit & made of decent metals you have to spend $1500.00 to $4000.00 USD, .

Colt seems to have poor mgmt and only the military/police contracts seem to be the strongest source of revenue for the long term plans.

 

[MICHAEL T]

Metro Arms has hand fit 1911 for less than a 1000. The Bobtail Commander I handled was fit every bit as good as my Dan Wesson CBOB

 

[wojownik]

The sad fact and real truth is that in 2015, if you want a high quality 1911a1 pistol that's hand fit & made of decent metals you have to spend $1500.00 to $4000.00 USD, .

Colt seems to have poor mgmt and only the military/police contracts seem to be the strongest source of revenue for the long term plans.

The first is not necessarily a comment about Colt, specifically - just where 1911 pricing has been trending for a while.

No, mil and police contracts have not been the strongest source of Colt's revenue for a while.

I'm looking forward to hearing more about the new dealer program that supposedly is out that reduces(?) Colt pricing.

 

[Jim Watson]

OT, but Oh, Really?

That Cooper/Colt's a helluva rifle, by the way.
The sample I had here was more accurate at 200 yards than it was at 100.
Denis

If you can demonstrate that under controlled conditions, Brian Litz has a deal for you.
http://www.longrangehunting.com/forums/f19/applied-ballistics-shoot-thru-target-challenge-144359/

"The Applied Ballistics 'Shoot Thru Target' Challange
I'm inviting any shooter who has a rifle which exhibits non-linear dispersion to the Applied Ballistics Laboratory in Michigan to demonstrate the effect. I'll pay your travel and hotel stay (If you successfully demonstrate the effect, I'll even pay your *return* travel as well ) The objective is to produce a repeatable example of this phenomena so it can be studied and hopefully we can learn what's going on."

 

[SSN Vet]

enter exhibit 'A'

When top 1911 gunsmiths recommend to their customers what brand 1911 they prefer to use as the foundation of a custom 1911 build, their first choice is Colt.

If you hang out on the 1911 pro forum or visit the top 1911 smiths web sites, or correspond with those smiths about doing a custom build you will find this to be true.

The reasons, as I understand them are..

1. Colt uses a forged frame and slide (vs. cast)
2. Most all 1911 accessories are designed around Colt's geometry.
3. They set up their machining fixtures (for front strap checkering, etc..) for Colt frames, and don't want to have to dial them in for the slightly different geometries found with other manufacturers.
4. The Colt brand adds value to the custom built 1911

 

[DPris]

Jim,
I tested that rifle at 100 & 200 yards off the bench at a state-owned rifle range, using the same ammunition & scope setting at both distances.
Wasn't even a high-power scope, just a good 4X.

I did get tighter groups at 200 yards.
I was quite surprised, since that's never happened before, and I fully understand why it doesn't NORMALLY happen.

I can only offer as a possible explanation two things, one a discussion I had at the Ballard shop in Wyoming several years ago, and the other an observation on target size.

When we were talking about accuracy with Ballard guys, I mentioned 100 yards & that distance was immediately brushed aside as being insignificant.
"What's important is what it starts to do at 200 yards."

The discussion was generic overall, but involved Ballard rifles peripherally.
The gist was that it can take some travel for a given bullet to stabilize in flight, to "go to sleep", as it was put.
Those guys felt that 100 yards wasn't a valid indicator of what a rifle could do at distance.
200 and 300 yards was.

The other observation is that I do my rifle testing using black bull's-eyes, typically at 100 yards, occasionally at 200.
I shoot for accuracy using the lowest scope setting, I find it's easier to center the crosshair junction inside a smaller circle than a larger circle.

That leaves the bull smaller in the optic at 200 than at 100.
It is POSSIBLE that the smaller & more precise aiming point at 200 yards helped in shooting a smaller group at that distance.

Since the gun has long since been returned to Colt & I will no longer fly unless it involves a family visit to the east coast, I'll have to pass on Litz's offer.

The point to take away from my initial post is that the Colt/Cooper is one VERY accurate gun.
Had I been 20 years younger I would have taken out a loan to finance keeping it.
As it was, very hard to let that one go.
Denis

 

[Aragon]

I thought I would post an image of the Colt/Cooper M2012. Given the quality of some comments on this thread I'm fairly sure some posters have no idea that Colt is even offering a precision bolt rifle for sale these days:

​

 

[DPris]

The sample I had was a woodie.
VERY fine rifle.
Denis

 

[boom boom]

DPris,
Mk 4 No. 1 Enfields also have that reputation of settling down and becoming more accurate at longer ranges which reportedly had to do with the dynamics of the rifle plus the service round used. Unfortunately, I cannot verify this via actual experience. I have two but unfortunately can rarely shoot even at 100 yards living in a metro area like I do.

Jim, you might want to contact Peter Laidler who is one of the living experts on British Service rifles with this offer. He can be found at milsurp.com in the Lee-Enfield forums.

 

[Zaydok Allen]

I thought I would post an image of the Colt/Cooper M2012. Given the quality of some comments on this thread I'm fairly sure some posters have no idea that Colt is even offering a precision bolt rifle for sale these days:

​

I've wanted one of these since 2013. No money for it though.

 

[DPris]

BB,
Had never heard that about the No 4 MK1 before.
Interesting to know.

Same hold true for the MKII?
I have a '55 Faz, but I've never taken it beyond 100 yards.
Denis

 

[Oldman1151]

As a member pointed out to me, this is yet another "business 101" thread, not in THR's mission statement.

That and thread seems to wondering off original topic that as you state is not in THR's mission statement yet it is allowed to continue.

 

[Elkins45]

I'm fairly sure some posters have no idea that Colt is even offering a precision bolt rifle for sale these days

Key word being "offering." The Kia dealer can also have a Mercedes on the lot, but that doesn't mean Kia is making $60K turbo diesel sedans.

 

[wojownik]

That and thread seems to wondering off original topic that as you state is not in THR's mission statement yet it is allowed to continue.

Yes, this seems to be wandering all over the place. There are a couple of important topics here ... but maybe we should bring this back to the original topic of the thread.

As for the "Business 101" comments, I don't agree with that, or understand why some are opposed to getting in-depth talking about of the business and finance aspects of the firearms industry, or Colt i particular. Yes, it might not be everyone's cup of tea, but it is a serious area of interest for some of us. All manner of arcane topics are broached on THR, and discussion of the survival of one of America's oldest firearms brands seems fairly relevant.

As far as what Colt is up to, this is definitely not 101 level business, and this is not a generic discussion of finance. It is a very targeted discussion. Behind the business terminology is a serious inquiry as to what Colt's management and debt holders are up to, what their intentions are, and whether one of the best known firearms manufacturers in history is going to be, well, history.

Back to the OP (a mere 194 thread posts ago) two key topics were originally raised, and things are still developing:

1. Colt's stocking dealer plan did not go over well. Allegedly they came out with a different plan, with increased production and lower prices coming. I'm waiting to hear more about that.

2. The bondholder deadline was delayed until May 18th (yesterdayl. What happened there? Well, they just punted the deadline again, to May 26th.

It will be very interesting to see what happens over the next week.

 

[robmints]

As a member pointed out to me, this is yet another "business 101" thread, not in THR's mission statement.

But this is a business thread about a gun company. How much more firearm related can you get? If you guys haven't noticed they sell guns in stores. It's all business. Personally I find the reasons and background very interesting.

When you click on a thread about "More Bad News from Colt" what are you expecting to read? If somehow a little bit about the business of firearms offends you, why would you click on the thread?

 

[Aragon]

Yes, this seems to be wandering all over the place. There are a couple of important topics here ... but maybe we should bring this back to the original topic of the thread.

As for the "Business 101" comments, I don't agree with that, or understand why some are opposed to getting in-depth talking about of the business and finance aspects of the firearms industry, or Colt i particular. Yes, it might not be everyone's cup of tea, but it is a serious area of interest for some of us. All manner of arcane topics are broached on THR, and discussion of the survival of one of America's oldest firearms brands seems fairly relevant.

As far as what Colt is up to, this is definitely not 101 level business, and this is not a generic discussion of finance. It is a very targeted discussion. Behind the business terminology is a serious inquiry as to what Colt's management and debt holders are up to, what their intentions are, and whether one of the best known firearms manufacturers in history is going to be, well, history.

Back to the OP (a mere 194 thread posts ago) two key topics were originally raised, and things are still developing:

1. Colt's stocking dealer plan did not go over well. Allegedly they came out with a different plan, with increased production and lower prices coming. I'm waiting to hear more about that.

2. The bondholder deadline was delayed until May 18th (yesterdayl. What happened there? Well, they just punted the deadline again, to May 26th.

It will be very interesting to see what happens over the next week.

The "business 101" prohibition is not only new, it's ludicrous. I started a thread on the Remington Outdoor Company yesterday. Their future will HUGELY impact the firearms market. Plenty of room for high road discussion about Remington yet it was immediately zapped -- while this thread continues.

Then again I sort of understand. The huge amount of misinformation (combined with some solid information as well) on this thread is enough to make one's head spin.

The future of Remington and Colt -- the US's two oldest arms makers deserves serious, "high road" discourse.

 

[Nuclear]

Re the comment about Colt and Ferrari, the latter gas always been on the bleeding edge of performance and technology. The last time Colt could claim that was decades ago.

As far as the business parts of the thread, not everyone knows or has access to an expert to explain what is going on with the companies that make our firearms, ammo and accessories. If we can't buy them because companies go out of business, that's important enough to discuss, right??

 

[Old Fuff]

Colt's stocking dealer plan did not go over well. Allegedly they came out with a different plan, with increased production and lower prices coming. I'm waiting to hear more about that.

Allegedly from the horse's mouth:

Colt Introduces New Stocking Dealer Program

May 18, 2015

WEST HARTFORD, Conn. – Colt, in an effort to better serve it’s core consumer base, has worked with its distribution partners to launch the new Colt Stocking Dealer Program. This program was created to support higher levels of consumer satisfaction, as Colt looks to strengthen its retail “We’re excited to bring Colt’s brand promise – ‘BUILT ONE AT A TIME, PROVEN EVERY ROUND™’ to more consumers,” says Colt’s Sr. Vice President of Commercial Business, Paul Spitale. “We need to ensure that when a future Colt owner visits a Colt Retailer, he or she has the opportunity to experience and select from a fuller compliment of Colt firearms.” The new Stocking Dealer Program ensures that dealers have ready-to-go inventory on hand of Colt’s core models, including the Colt .380 Mustang®, Defender™ or Combat Commander®, 1991 Series Government Model®, and either an LE6920 modern sporting rifle variant or Gold Cup®, depending on the market. In order to support this new program, Colt has been increasing production rates dramatically in the last 60 days and will continue to ramp-up throughout the implementation phase, which is scheduled to be completed by the end of August.

Colt has recently refocused its core model lineup to ensure ample opportunity for consumers to acquire the most sought-after models. These same models have been repositioned in the market with more attractive suggested retail price points: the standard 1991 Government Model now has an MSRP of $799, the Combat Commander carries an MSRP of $849, the Defender is now positioned at an MSRP of $899 just to name a few. “We had a very successful NRA Show, where we had a great opportunity to speak directly with Colt Consumers and Colt Distributors,” says Spitale. “Both were excited about Colt and our repositioning in the market.”

About Colt’s Manufacturing Company LLC

Colt’s Manufacturing Company LLC is one of the world’s leading designers, developers and manufacturers of firearms. The company has supplied civilian, military and law enforcement customers in the United States and throughout the world for more than 175 years. Our subsidiary, Colt Canada Corporation, is the Canadian government’s Center of Excellence for small arms and is the Canadian military’s sole supplier of the C7 rifle and C8 carbine. Colt operates its manufacturing facilities in West Hartford, Connecticut and Kitchener, Ontario. For more information on Colt and its subsidiaries, please contact Devin Green, [email protected], 800-962-2658 x1360 / 860-244-1360

http://firearmusernetwork.com/2015/05/18/colt-introduces-new-stocking-dealer-program/

Apparently this new program will only include stocking dealers, who will be required to keep a mandated level of Colt products on hand; and in exchange receive advantageous discounts on selected models.

 

[Aragon]

Re the comment about Colt and Ferrari, the latter gas always been on the bleeding edge of performance and technology. The last time Colt could claim that was decades ago.

As far as the business parts of the thread, not everyone knows or has access to an expert to explain what is going on with the companies that make our firearms, ammo and accessories. If we can't buy them because companies go out of business, that's important enough to discuss, right??

Ferrari is light years behind companies like Honda when it comes to automotive technology.

Besides, exactly what giant technology breakthroughs have happened in firearms in the past 50+ years? The M16, the Glock 17 and the zillions of derivatives from those two very basic, low tech designs.

Firearms (with the possible exception of sighting systems) ARE low tech instruments.