Colt’s Struggling To Stay Afloat, Bankruptcy Looms

Colt is one of those companies that is part of the fabric of American History.  I know a lot of folks consider it socialism for the government to extend loans or even offer to basically co-sign for loans for private industry.  But if we can bail out Wall Street Bankers who gamble on credit default swaps and other sketchy things we can damned sure keep a company that has place in our history and that produces American made goods going while they reorganize.

We sometimes seem to throw money away on dubious military contracts.  Colt makes damned fine firearms perhaps Uncle Sam should consider buying some.

Read some of the comments about the Hedge Fund boys who seem to be the cause of Colt’s problems.

From The Firearms Blog:

by Nathaniel F

The news stories about Colt’s have been piling up recently. I admit I am not as well-versed in financial-ese as I could be, which has made me hesitant to cover the subject. It’s a good thing, then, that Hognose of WeaponsMan has covered the ongoing saga of financial flailings better than I could have:

We’re hearing rumblings about something we’ve discussed before: the perilous financial state of the privately held, and hedge-fund-looted, firearms manufacturer, Colt.

Colt’s hedgies (several generations of them, currently Sciens Capital) have taken it through multiple unnecessary reorganizations, each time stripping as much cash out of the company as possible, pocketing as much as they can get away with, and leaving it saddled with unsustainable debt. The company has hundreds of millions in debt that it has no reasonable chance of repaying. Now, faced with inability to pay a $10.9 million interest payment owed this month, the company’s managers seek to stave off default with hedge-fund chutzpah: offering investors the “opportunity” to take a 70% haircut on $250M of their bonds, or, alternatively, the company will bang out bankrupt — in a prepackaged bankruptcy modeled on that of the Government Motors rip-off and using the same obscure section of the bankruptcy code. Like the Chrysler and GM  bankruptcies, this plan will preserve the equity of favored creditors — the hedge fund managers — while ruining, or at least haircutting, disfavored creditors — like the bond holders.

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