I don't think that GD wants anything to do with the retail or sporting side of swhc. Much like ATK dropping the sporting side of their business. They can be useful partners, and each of their contributions makes a project very special.
There may be future partnership opportunities for these companies. General Dynamics might want to partner on an AR project for military organizations, as Colt is swirling still, and is a relatively weak competitor. I will add further that morgan stanley didnt get into the colt deal for nothin. I think it was a bridge financing and i think they were accumulating colt debt for dimes on the dollar before the refinance took place. Expect some news from colt soon, as their business fundamentals are in the toilet and certainly werent improved with a refi.
They must have been reading the illustrious posts on this here message board.
Thanks. Good info. So if we extended the declining trend then factored in the seasonal effect in the 'hunting' quarter, it will be interesting for swhcs quarter ended october...
How does it look compared to 2012. 2013 is really an outlier as the gunmakers were shipping everything they made, shipping as fast as they could. One thing to think about is the marketshare was distributed to second and third tier brands that wouldnt be considered today. My goodness, people were paying big bucks for a taurus, stoeger, highpoint, you name it...
Even the guy with the nutty messages is gone. I wonder if the shorts covered more. Short interst down to 11 mil shares, down from about 21 mil in march 2014
I think that both rgr and swhc got a boost from colt not going into the toilet. Perhaps the market was discounting for the potential takeover of colt by rgr or swhc? WTFDIK!
#$%$, $10 million, not $100 million. And no equity kicker...but they likely boight up all the debt for 25%, now making an instant 75% profit....plus they are probably pushing the company to sell. Verkauf.
Morgan stanley took out the old debentures.... Funny thing is morgan stanley probably bought all the old debt first for pennies on the dollar. They probably put an equity kicker on the debt .....or maybe this is going to be a DIP loan....
Part of their strategy is to 'right price' their pistols and ultimately control what happens at the retail level. So, they offer top end and well respected pistols at prices that beat glock, beretta, springfield (same class in my estimation) ...the market has no choice but to assign share to smith and wesson....ruger got spiked because their long gun line is startng to resemble a firearms museum. The ruger american is an exception, but good god, that mini-14 is for marching down sentimental street, snd the 10/22 is being overtaken by the likes of the AR22 from swhc...
Every once in a while you need to clean the bilge and bring in new talent. Swhc brought in debney who knew virtually nothing about guns....fifer better watch his step. His board should bring him down for being such a #$%$ to the analysts ...
Just remember, they amended their credit agreement very recently...the lenders have to be quite cross at this JUNCTURE. THe lenders probably told colt to go find a buyer at the last amendment. They likely did; the buyer said only in a 363, so here we are. Its not unusual for a debtor to avoid filing a 10q just before chapter filing,,,it avoids a potentially messy situation.
Good strategy... Debney isnt discounting the gun. They are already "right priced" for the product...their prices are competitive and the product is number #1. The maggs probably cost about $4 each...
Takes a few minutes and look at colts last 10q. They will most likely file a chapter 11 in a matter of days.
Yes, they would be selling the brand, the retail exposure, sales, intellecual rights, etc.. The buyer would likely put the volume in the buyers existing plants, change around the supply chain, etc... Ruger and swhc both have excess capacity.... Ruger might want to bring its product line more out of the shadows and actually have a line that is the top of a product class rather than competing with everyone els in the next tier. To elaborate, ruger polymers are second to glock and swhc...most rifles are the same. Ruger wheelguns might occupy space in the first tier, but i dont know. Ruger has always seemed to emphsize value (a function of quality and price) the approach is quite stable , but it will never be interruptive, like swhcs m&p as an example.
I don't see a curtailment of operations. The bank(s) will fund the company until it is sold in a 363 sale (chapter 11). Once the doors close, whatever value is there goers down by 40%.
In October 2014, the Company revised its 2014 internal forecast to reflect a continued decline in market demand for commercial MSR’s (modern sporting rifles), recent declines in the demand for the Company’s commercial handguns, delays in anticipated timing of U.S. Government sales and the timing of certain international sales. Under the revised internal forecast, the Company expects to report significantly lower Adjusted EBITDA for the year-ended December 31, 2014. Currently, the Company expects to report a decline in net sales for the three and nine months ended September 28, 2014 compared to the three and nine months ended September 29, 2013 (as revised) of approximately 25% to 35% and 20% to 30%, respectively. The Company also currently expects to report a decline in operating income for the three and nine months ended September 28, 2014 compared to the three and nine months ended September 29, 2013 (as revised) of approximately 50% to 60% and 110% to 120%, respectively, excluding the impact of the gain on effective settlement of contract in the three and nine months ended September 29, 2013 of $15.3 million. These preliminary results are subject to change. These combined factors have put significant pressure on the Company’s current and future liquidity position.
As of November 12, 2014, the Company’s availability under its Credit Agreement with Wells Fargo Capital Finance, LLC (“WFCF”) was limited to approximately $1.0 million as a result of the Company’s inability to be in compliance with the WFCF fixed charge coverage ratio (“FCCR”) for the twelve month period ended September 28, 2014.
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.
PART III — NARRATIVE
State below in reasonable detail why Forms 10-K, 20-F, 11-K, 10-Q, 10-D, N-SAR, N-CSR, or the transition report or portion thereof, could not be filed within the prescribed time period.
Colt Defense LLC (the “Company”) is unable to file the subject report in a timely manner because the Company is working through accounting considerations and liquidity concerns with respect to its financial operations. As a result of several recent business trends negatively impacting the Company’s current and forecasted revenues and cash flows, the Company is evaluating its forecasted operating cash flows in consideration of recent delays in product shipments and availability of borrowings under the Company’s Credit Agreement. As of this filing, the Company believes that it is probable that it will not be in compliance with its Term Loan covenants, as amended, as of December 31, 2014 as they currently exist absent an amendment, waiver or refinancing of the Term Loan Facility. The Company is in current discussions with existing and potential financing sources to address the situation as discussed below in Part IV.
.....comment. The end is near.
There is nothing like an auction. It scares away the vultures. Freedom grp, ruger, ans smith will all have rhere toes in the water for colt...but who is hungriest/greediest will win the bid. The overlap might cause debney to look away. I think it will go to a company with significant competencies in production, though. You are right about continuing to track...situations change daily.
Colt defense releases their reporting in a few days. I would agree that Colts numbers are somewhat tangental to Smiths situation, however, i think with the release of Colts numbers there will be speculation on the demise of Colt and who will get the spoils. Swhc does have good respect in the msr line....just sayin