Matthew Rocco for Fox Business reports:
Colt Defense, the iconic 179-year-old gun maker, filed for bankruptcy amid delays to military contracts and a struggle to capitalize on the surge in consumer firearm sales.
Colt hopes to be auctioned off by Aug. 3, saying it can’t afford drawn-out Chapter 11 proceedings. Sciens Capital Management, Colt’s private-equity backer, will act as a “stalking horse” bidder to start the sale. According to a recent regulatory filing, Sciens currently owns an 87% stake in Colt.
The West Hartford, Conn.-based company holds approximately $355 million in debt. Existing lenders will contribute $20 million in financing to keep Colt running during bankruptcy.
Colt has a storied history. Samuel Colt pioneered mass production of firearms, and the Single Action Army revolver—nicknamed the “Peacemaker”—has been credited as “the gun that won the west.”…Colt created the M16 and shorter-barreled M4, but the company lost manufacturing contracts tied to both rifles. In 2013, Belgium gun maker FN Herstal outbid Colt and Remington to supply the U.S. military with M4s.
Accounting issues also contributed to Colt’s woes, forcing the company to restate prior years’ financial results.
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