So Long COLT

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So Long COLT

Post by The Twizzler » Tue Jun 16, 2015 6:01 pm

I don't know if you have read the news but Colt declared bankruptcy today. Now, I know they are not closing the doors and that this is more of a restructuring(albeit with same board members that got them there :evil: ) but is this possibly the beginning of the end. What are your thoughts on this. How did they manage to run COLT into the ground? Was it the slipping quality, uncompetitive pricing, failure to perceive future market trends, over reliance on military and police sales, or corporate fleecing of the name for short term profit over long term feasibility.? I also wonder if this same thing is foreshadowing for H&K.

So Long COLT and Thanks for all the fish
Last edited by The Twizzler on Tue Jun 16, 2015 10:12 pm, edited 1 time in total.
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Re: So Long COLT

Post by raptor » Tue Jun 16, 2015 6:10 pm

The brand name Colt is a very valuable commodity. Even if the firm is liquidated in bankruptcy, the brand name "Colt" is not likely to go away any time soon.

It would likely be purchased and put on some gun maker's product.

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Re: So Long COLT

Post by 12_Gauge_Chimp » Tue Jun 16, 2015 6:21 pm

raptor wrote:The brand name Colt is a very valuable commodity. Even if the firm is liquidated in bankruptcy, the brand name "Colt" is not likely to go away any time soon.

It would likely be purchased and put on some gun maker's product.
Five bucks says Colt gets bought out by the same folks who bought Marlin, Bushmaster and a few others.

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Re: So Long COLT

Post by Unorthodox » Wed Jun 17, 2015 1:22 am

12_Gauge_Chimp wrote:
raptor wrote:The brand name Colt is a very valuable commodity. Even if the firm is liquidated in bankruptcy, the brand name "Colt" is not likely to go away any time soon.

It would likely be purchased and put on some gun maker's product.
Five bucks says Colt gets bought out by the same folks who bought Marlin, Bushmaster and a few others.
Freedom Group? Yeah, that would make sense without screwing the pooch quality wise (at least I hope)
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Re: So Long COLT

Post by raptor » Wed Jun 17, 2015 10:40 am

Sciens Capital Management is listed as owning 87% of the company. Principals of the firm also separately own some of the assets.They also want to buy 100% of the company but lose most of the debt in the process.

http://www.sciensam.com/asset-classes/private-equity/

Since the Senior Bond Holders agreed to $20 million of DIP financing to allow continued operations clearly they are not going to shut down. Note if you are a senior bond holder in a situation like this doing DIP financing makes sense if you have the capital.

What it appears is that the "junior" bond holders (their debt is subordinate to the senior debt - think 2nd mortgage or credit card debt) want their money (and what lender doesn't) and that Colt could not afford to repay the debt and could not refinance likely due to issues of product (firearms) and performance (lack of profits). They are using bankruptcy to force the junior debt holders to take less, likely a lot less than they are owed.

I would note that the statement below say sin effect all of our debt due to trade creditors, customers and employees are being re-affirmed. The bond holders though get a choice of dick or bubble gum and Colt is all out of bubble gum. :D
"The plan we are announcing and have filed today will allow Colt to restructure its balance sheet while meeting all of its obligations to customers, vendors, suppliers and employees and providing for maximum continuity in the Company's current and future business operations," said Keith Maib, Chief Restructuring Officer of Colt Defense, in a statement.
I think Colt will not likely be taken over just by a third party just yet. Sciens has access to enough capital to pull this off without someone like Freedom Arms. Still it would make sense to partner with another more successful operator since the clearly there are operational issues that led to these problems.

If Colt was wildly successful this would not have happened in the first place. The first thing I would do if I was involved in the restructuring is to look for a good strategic partner to help with both operations and sales after the restructuring is completed.

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Re: So Long COLT

Post by crypto » Wed Jun 17, 2015 10:51 am

The Twizzler wrote:I don't know if you have read the news but Colt declared bankruptcy today. Now, I know they are not closing the doors and that this is more of a restructuring(albeit with same board members that got them there :evil: ) but is this possibly the beginning of the end. What are your thoughts on this. How did they manage to run COLT into the ground? Was it the slipping quality, uncompetitive pricing, failure to perceive future market trends, over reliance on military and police sales, or corporate fleecing of the name for short term profit over long term feasibility.? I also wonder if this same thing is foreshadowing for H&K.

So Long COLT and Thanks for all the fish

I think once they lost the gov't M-16A4 contract to FN they started hemorrhaging money badly. They aren't set up to compete with a thousand places selling AR-15's with almost zero overhead.
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Re: So Long COLT

Post by Stercutus » Wed Jun 17, 2015 5:39 pm

crypto wrote:
The Twizzler wrote:I don't know if you have read the news but Colt declared bankruptcy today. Now, I know they are not closing the doors and that this is more of a restructuring(albeit with same board members that got them there :evil: ) but is this possibly the beginning of the end. What are your thoughts on this. How did they manage to run COLT into the ground? Was it the slipping quality, uncompetitive pricing, failure to perceive future market trends, over reliance on military and police sales, or corporate fleecing of the name for short term profit over long term feasibility.? I also wonder if this same thing is foreshadowing for H&K.

So Long COLT and Thanks for all the fish

I think once they lost the gov't M-16A4 contract to FN they started hemorrhaging money badly. They aren't set up to compete with a thousand places selling AR-15's with almost zero overhead.
Colt has been plagued by problems for a generation. Poor innovation, bad product introductions, disastrously short sighted politics, strikes and at times poor QC. This is actually their second bankruptcy that I know of.

When they are good their products are pretty good. When they are bad, they stink. The Colt's that I own are some of the finest examples of their kind. They have made other weapons I wouldn't piss on.
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Re: So Long COLT

Post by Supervisor42 » Wed Jun 17, 2015 7:10 pm

Stercutus wrote:.... The Colt's that I own are some of the finest examples of their kind. They have made other weapons I wouldn't piss on.
As a Colt owner, you may have fingered their problem :idea:.
How can you start with something as awesome as the Samuel L. Colt legend: "the gun that made all men equal" and end up here?
I'll bet there are some young people that should be spanked :x.
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Re: So Long COLT

Post by The Twizzler » Wed Jun 17, 2015 7:23 pm

If they do seek a partner who do you think it might be? They might be a smaller company( maybe to small) but what about Keltec? They definitely bring new ideas which Colt is in desperate need of and it seems that this could help with their production shortages. Another idea might be Beretta, they definitely have the money and their new AR competitor rifle (ARX?) looks like it may be headed for failure.
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Re: So Long COLT

Post by minengr » Thu Jun 18, 2015 5:29 am

Despite owning a few, I've never been a huge fan. I may be talking out my backside, but I wouldn't be shocked it their suituation isn't similar to what Winchester/Olin/New England Arms/whoever the hell owns them went through 10 years ago. Old factories, tooling, and location probably aren't doing them any favors. Again, could be totally wrong but wouldn't be surprised if a new plant opened up in SC, AL or GA a few years from now. I also know from a trusted source that their customer service needed improvement.
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Re: So Long COLT

Post by crypto » Thu Jun 18, 2015 10:16 am

It's always been super frustrating to me that Colt came out with the 1911 and then just sort of stopped trying when it comes to pistols.

It's almost like they're a

(•_•)
( •_•)>⌐■-■
(⌐■_■)

One-trick pony.



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Re: So Long COLT

Post by Stercutus » Thu Jun 18, 2015 1:38 pm

crypto wrote:It's always been super frustrating to me that Colt came out with the 1911 and then just sort of stopped trying when it comes to pistols.

It's almost like they're a

(•_•)
( •_•)>⌐■-■
(⌐■_■)

One-trick pony.



Image
Stopped trying?

Image

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They quite trying but it was well after the 1911.
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Re: So Long COLT

Post by Paladin1 » Fri Jun 19, 2015 9:30 pm

From what I read Sciens Capital was taking quite a bit of money out of the company for themselves. It appears they were riding that horse hard.

In conjunction, management sat on their butts and almost ignored the civilian market. This includes AR innovation as well as the huge growth of carry guns.

By the time they did get a couple out there, the market was flooded with competition.

Classic case of corporate greed and a company riding it's reputation.
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Re: So Long COLT

Post by Stercutus » Fri Jun 19, 2015 9:36 pm

It does seem a bit ironic that one of the largest makers of ARs goes bust right after the biggest gun boom in US history. You pretty much have to be a moron to do that trick.
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Re: So Long COLT

Post by raptor » Fri Jun 19, 2015 9:50 pm

The fact that they lost a major contract to FN says volumes about their pricing/cost of production.

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Re: So Long COLT

Post by Paladin1 » Sat Jun 20, 2015 9:24 am

Stercutus wrote:It does seem a bit ironic that one of the largest makers of ARs goes bust right after the biggest gun boom in US history. You pretty much have to be a moron to do that trick.

That's exactly why many feel that this pretty much a corporate plundering.

http://www.breitbart.com/big-government ... -too-much/
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Re: So Long COLT

Post by raptor » Sat Jun 20, 2015 9:42 am

When loans are made especially in private equity transactions there are always financial covenants that address things some would call "plunder". These typically include restrictions on payments of any kind to investors and key personnel. If there was a plundering, it was done with the consent of the lenders; if not, the bankruptcy trustee will "claw" back the plunder through lawsuits.

I am not an expert on Colt but I did read the initial bankruptcy filing. The fact that there are junior debt holders shows these have been long term issues. It also appears to me at for now that the junior debt holders are the ones getting hosed.

If you are a junior debt holder you are hopefully a sophisticated lender who likes high risk loans. If not you should not be in the subordinated debt business.

My guess is that the business plan relied on a business concept that ignored the consumer retail aspect of the business to pursue higher margin .gov business.

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Re: So Long COLT

Post by Lodewijk » Mon Jun 22, 2015 12:17 pm

Stercutus wrote:It does seem a bit ironic that one of the largest makers of ARs goes bust right after the biggest gun boom in US history. You pretty much have to be a moron to do that trick.
It's pretty logical. Colt doesn't sell nearly the volume of 1911s that people think, so when the channel started filling up with ARs there was no alternative but to keep stuffing it further, driving down unit price and margin until they were dead on their feet. The last gasp was a very large shipment of 6920s to Walmart for basically nothing.

Since they did not have other products to rely on, and have been on thin ice for years just trying to make it from one interest payment to the next, the fall in demand finally killed them. They knew it was coming and couldn't slow down, because that just would have meant bankruptcy sooner.

Colt didn't fall apart all at once, mind you, they've been rotting from the inside out since the 1980s.

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Re: So Long COLT

Post by raistlin » Mon Jun 22, 2015 2:01 pm

Lodewijk wrote:
Stercutus wrote:It does seem a bit ironic that one of the largest makers of ARs goes bust right after the biggest gun boom in US history. You pretty much have to be a moron to do that trick.
It's pretty logical. Colt doesn't sell nearly the volume of 1911s that people think, so when the channel started filling up with ARs there was no alternative but to keep stuffing it further, driving down unit price and margin until they were dead on their feet. The last gasp was a very large shipment of 6920s to Walmart for basically nothing.

Since they did not have other products to rely on, and have been on thin ice for years just trying to make it from one interest payment to the next, the fall in demand finally killed them. They knew it was coming and couldn't slow down, because that just would have meant bankruptcy sooner.

Colt didn't fall apart all at once, mind you, they've been rotting from the inside out since the 1980s.
+1

I thought the writing was on the wall for Colt when they abandoned the Colt Python. It was if they gave up on the handgun market, and were just going through the motions with the 1911s (and the Mustangs).
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Re: So Long COLT

Post by Smash05 » Mon Jun 22, 2015 2:40 pm

raptor wrote:The fact that they lost a major contract to FN says volumes about their pricing/cost of production.
Newer factory, more automation, lower labor costs in in the South where FN has it's US factory. The issue is everyone builds an AR and a 1911 now, many at lower price points than Colt has ever produced a firearm. You had firms that never built an AR start (S&W, Remington, etc) and so on. Can you see Colt offering a Polymer striker fired handgun, or a rifle not based on the AR design? It's not what they are about. I think they should go whole hog on making new revolvers, make simpler more reliable 1911's, offer items at the entry level instead of acting like they are the Boutique of firearms manufacturers. Ruger and S&W do well because they cater to Joe Public Gun Owner. Colt mysticism will never out perform the almighty dollar.
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Re: So Long COLT

Post by Stercutus » Tue Jun 23, 2015 1:47 am

The last gasp was a very large shipment of 6920s to Walmart for basically nothing.
Now there was a bad business decision that really worked for me. :D
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Re: So Long COLT

Post by 400 Grains » Thu Jun 25, 2015 3:46 am

Smash05 wrote:
raptor wrote:The fact that they lost a major contract to FN says volumes about their pricing/cost of production.
Newer factory, more automation, lower labor costs in in the South where FN has it's US factory. The issue is everyone builds an AR and a 1911 now, many at lower price points than Colt has ever produced a firearm. You had firms that never built an AR start (S&W, Remington, etc) and so on. Can you see Colt offering a Polymer striker fired handgun, or a rifle not based on the AR design?
Yup. They did both.

I own 2 of the pistols and a couple of the rifles they sold.

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Re: So Long COLT

Post by Stercutus » Fri Jun 26, 2015 2:34 pm

They made a few really nice rifles that had nothing to do with the AR.

The reason you never heard of them is because they then failed to market them.

:oh:
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Re: So Long COLT

Post by raptor » Tue Jun 30, 2015 6:33 pm

An old and powerful brand name like Colt always attracts bidders.

http://news.yahoo.com/california-tribe- ... nance.html
A Native American tribe in California is looking to make a bid for Colt Holding Co, the 179-year-old gun manufacturer, according to a tribal attorney.

"Colt is an iconic business and we're sort of intensely interested in helping a business like that," Drew Ryce, attorney for the Morongo Band of Mission Indians, told Reuters on Tuesday. "Colt is the Gun that Won the West. We are the West."

The firearms manufacturer filed for bankruptcy on June 14 and is considering putting itself up for sale.

Ryce said the Banning, California-based tribe was looking to diversify its economy and an East Coast manufacturer would balance the tribe's focus on retail, gambling and hospitality in Southern California.

A Colt spokesman declined to comment.

The manufacturer is controlled by Sciens Capital Management, a private equity firm that had proposed buying Colt in a sale that would not include any cash but would assume Colt's obligations, other than $250 million of bonds.

Ryce said the Morongo would qualify as a minority bidder in seeking government contracts, a big potential market for the gun maker, which would give Colt a leg up if it were owned by the tribe.

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