The Wall Street Journal reports that Colt Defense LLC has filed papers with the Securities and Exchange Commission indicating it does not have the funds to pay back loans and may default on its payments to bondholders.
via REPORT: Colt May Default After Poor Quarterly Sales | 2014-11-13 | Grand View Outdoors.
So explain t me how is it that a Gun Manufacturer…excuse me THE Gun Manufacturer that has the historical DNA of the Peacemaker, the 1911, the Python and the M-16/M-4 running through its corporate veins is about to under-perform the guy that came up with the 3D printing or the other guy who built an AK from a shovel?
Hat Tip Say Uncle
26 thoughts on “Dying of thirst crossing the river? Colt goes under.”
They sold out commercial for government contracts and forgot how to compete in the open market. When the contacts dried up they didn’t know what to do anymore. Serves them right for getting into bed with the state.
I understand that but they were cut off what? 10 years or more ago? And still have not figured out what to do?
If I were to guess, it was a combination of mad management and loss of creative design personnel.
Something I read yesterday was claiming they were waiting for payment on a contract. It was announced several months ago after they acquired LWRC that they had been contracted to upgrade the current military stock of M16s and M4s.
Herstal just finished the M4 contract and the new one went to Remington. They are hosed.
What are you talking about? Remington’s M4 contract (W56HZV-12-D-0056) was cancelled years ago after Colt’s protest, and FN won on the recompete. FN’s contract (W56HZV-13-D-0030) isn’t scheduled to be complete yet for several years.
Daniel, I was unaware of that. Thanks for letting me know. I thought FN was totally out.
There is no evidence that the LWRCI deal ever went through. Something like that would have been mentioned in Colt’s SEC filings.
As much as I like the pretty horsey, Colt has a proud tradition of declaring bankruptcy, starting in 1843, a mere 7 years after Sam got his patent for the main features of the Paterson.
I believe this current bankruptcy is caused by them bringing their government and commercial groups back together under one roof. It cost them close to $60 million to do it, and they haven’t had the sales to back up that outlay of cash. When you can now buy a gun with as good a quality for $300-$700 less, the Prancing Pony just isn’t worth it.
The number of people commenting on this filing who have no idea what they’re talking about is staggering.
Commenting on a company saying “I don’t have money to pay for what I owe” in a time where even pot-metal guns were flying off the shelves does not require a degree from some higher education facility.
Please do tell, Caleb. I’ve looked on Gunnuts but must have missed your blog post on this subject.
That’s because it’s not (yet) worth talking about. The filing says that Colt Def LLC will not be able to make a payment on a loan that’s due on date X assuming they’re not able to negotiate alternate payment terms. Everyone is acting like they’ve already defaulted and declared bankruptcy, when in fact none of that has actually happened yet.
Furthermore, 2014 has been a terrible year for the entire industry. I don’t know where people got the idea that guns were flying off the shelves this year, because it’s just not true. All of the big players have reported revenue downturns, it’s just that some were bettered prepared for it than others.
Mostly I’m just tired of seeing people report on this particular SEC filing like it’s the death of Colt. Does Colt have financial problems? Yes. So an accurate headline would have been “Colt reports financial shortfall in SEC filing, will potentially miss loan payment if alternate payment agreements cannot be reached.”
But instead everyone’s running off a bridge going “OMF COLT GOING BANKRUPT THE SKY IS FALLING.”
I am gonna give you that last year. But I do have to think about who is going to give Colt the benefit of the doubt to a company who missed to cash in on six years of outstanding firearms sales without doing some serious decapitation at management level. If you were too damn stupid to capitalize when stuff was going good, why should anybody bail you out now that things are going down to a normal flow and competition is becoming harder?
The again Colt is too big to fail….
Colt has received a $70MM loan from Morgan Stanley:
This is exactly why I didn’t write about their SEC filing, and especially didn’t want to engage in the sort of hyperbole that’s been going around the internet.
Look for Ivy League management.
….2-words….. David Zhilkha
They built a fence down the center of the plant. That about says it all right there.
If they would dedicate their entire manufacturing capability towards producing .22LR ammo they’d make a killing.
The solution is simple.
Python and Andaconda.
Get them back on the shelves, at a price competitive with the new S&W models, and they will have plenty of sales.
I love my Python! I think that it’s the sweetest revolver ever made, but then I don’t pretend to be objective on the subject.
Not surprising news given the arrogance of their leadership over the years. Back in 2008, I had a very public exchange with their then COO, Maj Gen James R. Battaglini, USMC (Ret.). In a few minutes of embarrasing (for him) monologue, he managed to insult several major small arms industry leaders in the room, pointedly disrespected me as the keynote speaker, and made claims that amounted to pure marketing hype contrary to the spirit of the symposium. He was subsequently banned from further participation at that conference.
My very brief point (about 2 mintues out of a 30-minute talk) that incited Battaglini was simply that we needed competition for the Army’s carbine. Not the least bit intimidated by Battaglini’s rant, I simply replied that if everything that Battaglini said was true, Colt had nothing to fear from competition. Obviously, they had a lot to fear. First Remington (briefly), then finally FNH beat Colt for the contract. With that kind of leadership and lack of vision, color me shocked.
That was some good digging! See, it wasn’t even in my presentation. I just made a brief comment at the end because the Department was and is keen on competition to obtain the best capability for the warfighter at the best value for the taxpayer. I used the SCAR program, for which we funded the testing, as a good example of such an effort. Didn’t go over well with Colt.
Maybe Obama will bail them out. 😉
[…] usually phlegmatic Miguel at Gun Free Zone writes the alarming headline: DYING OF THIRST CROSSING THE RIVER? COLT GOES UNDER. And he axes, “How is it that …THE Gun Manufacturer that has the historical DNA of the […]
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