From Colt's website:
Colt hopes this will save some interest payments, extend the maturity date on some of its notes, and enable it to better attract additional financing. It's not clear to me how converting 8.75 percent notes to 10 percent notes saves interest. Others with more acumen may understand.
Colt says that the deal is contingent upon 98 percent acceptance by those who own the notes affected. If they don't get it, they may file a "pre-packaged" Chapter 11 bankruptcy. Chapter 11 allows for reorganization of a business, including its debt, while keeping a business running. Colt would file the same proposal as its reorganization plan and it would cover 100 percent of the notes in question.
I don't think Colt's financial stress or it's intent to restructure its debt comes as any surprise. There was even a recent thread which included a review of Colt's troubles from the 1980s forward. Colt makes good firearms. I hope they can succeed.
http://www.colt.com/ColtintheMedia/...e-LLC-Launches-Restructuring-Transaction.aspxOn April 14, 2015, Colt Defense LLC (“Colt” or the “Company”) and Colt Finance Corp. (“Colt Finance” and together with Colt, the “Issuers”) announced that they have commenced an exchange offer (the “Exchange Offer”) for their 8.75% Senior Notes due 2017 (the “Old Notes”) and related guarantees. . . .
The Exchange Offer will offer Colt’s and Colt Finance Corp.’s 10.0% Junior Priority Senior Secured Notes due 2023 (the “New Notes”) and related guarantees for any and all outstanding Old Notes. The New Notes will mature on November 15, 2023. ...
Colt hopes this will save some interest payments, extend the maturity date on some of its notes, and enable it to better attract additional financing. It's not clear to me how converting 8.75 percent notes to 10 percent notes saves interest. Others with more acumen may understand.
Colt says that the deal is contingent upon 98 percent acceptance by those who own the notes affected. If they don't get it, they may file a "pre-packaged" Chapter 11 bankruptcy. Chapter 11 allows for reorganization of a business, including its debt, while keeping a business running. Colt would file the same proposal as its reorganization plan and it would cover 100 percent of the notes in question.
I don't think Colt's financial stress or it's intent to restructure its debt comes as any surprise. There was even a recent thread which included a review of Colt's troubles from the 1980s forward. Colt makes good firearms. I hope they can succeed.