A federal court approved a plan by iconic gun maker Colt Defense this week to lead the company out of bankruptcy, but details are not set in stone as debtors still need to vote.
The painstakingly detailed plan is a result of “extensive and vigorous negotiations” that have been ongoing since Colt filed for Chapter 11 protections in June, according to Tuesday’s filing with the U.S. Bankruptcy Court in Delaware.
Colt said the plan reflects a consensus reached by key stakeholders that include the equity firm that owns it, Scens Capital Management, and secured lenders, Morgan Stanley, an official committee of unsecured creditors, and the landlord of Colt’s facility in West Hartford, Connecticut.
The plan will solidify options for Colt to manage financial obligations. Also, the hopes are debtors will be able to successfully restructure the $250 million senior notes claims, and ensure operations continue at the company’s West Hartford facility while preserving the more than 700 employees.
Participants have until the voting deadline on Dec. 7 at 4 p.m. eastern to cast their ballots. If votes are favorable, Colt said it should be out of bankruptcy by the end of the year.
Following release of the plan, Colt prepared annual financial projections for fiscal years 2016 to 2019 that show the company’s sales grow by $85 million after four fiscal years. Also, projections show new products, which is where Colt has been hurting in recent times, generating $265 million in sales from 2016 to 2019.
Some of the assumptions are that Colt will expand product offerings, brand recognition will continue to attract commercial and profession customers, and it will sell-through existing backlogs. Also, for larger margins, the company assumes it will continue to procure government contracts and international opportunities will pan out.
Months before declaring bankruptcy, in 2014, Colt reported a net loss of $7.8 million, down from $11.3 million profit in the year before.