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Colt Defense may lack funds to meet obligations over next 12 months
By Caroline Salls
Pittsburgh, Nov. 25 – Colt Defense LLC may not have enough cash and cash equivalents on hand and credit agreement availability to meet its obligations over the next 12 months, including its $10.9 million interest payment due May 15 on its senior notes, according to a 10-Q filed Tuesday with the Securities and Exchange Commission.
After giving effect to market and business challenges, as well as the sales opportunities the company believes exist, Colt said it has forecast revenue and adjusted EBITDA growth in 2015, but there can be no assurance that the actual demand for its commercial MSRs or commercial handguns will meet the internal forecast.
In addition, the company said there is no assurance that U.S. government or international sales will take place as forecast, primarily because of a government regulatory approval process that is difficult to predict.
Absent achieving its internal forecast for the remainder of 2014 and 2015 and the successful execution of a management strategy of addressing other long-term debt, Colt said it probably will not be able to meet its obligations as they come due over the next 12 months.
According to the 10-Q, the company does not currently have enough funds to repay the debt upon an acceleration of maturity.
If the debt is accelerated, the company said its lenders may take steps to secure their positions as creditors and mitigate their risks, which would impact Colt’s liquidity.
The company said these factors raise substantial doubt about its ability to continue as a going concern.
Colt Defense is a West Hartford, Conn.-based small-arms weapons systems manufacturer.
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