Colt Defense again extends exchange; tender response rises slightly

New York, May 26 – Colt Defense LLC once more extended its exchange offer for its $250 million of 8¾% senior notes due 2017.

The new expiration is 5 p.m. ET on June 2, pushed back from 5 p.m. ET on May 26 and before that from 5 p.m. ET on May 18.

As of the previous expiration on May 26, holders had tendered $14.2 million, or 5.7%, of the notes, up marginally from $14.1 million, or 5.65%, as of May 18 and $12.7 million, or 5.1%, on May 12.

In a news release announcing the extension, Cold repeated its earlier statement that it believes it is in the best interests of stakeholders to actively address the company’s capital structure.

Talks are ongoing with an ad hoc group of noteholders and Colt added that it hopes the discussions will result in a consensual restructuring transaction.

The offer originally had been set to end at midnight ET on May 11.

Colt announced the offer on April 14, saying it was the latest step in a series of transactions designed to restructure its balance sheet.

In addition to the exchange, Colt is also soliciting consents for a pre-packaged Chapter 11 filing in case it does not reach the desired response level in the exchange. The consent deadline has been extended to coincide with the end of the offer.

As previously announced, Colt Defense LLC and Colt Finance Corp. are offering $350.00 of new 10% junior priority senior secured notes due Nov. 15, 2023 in exchange for each $1,000 of its 8¾% notes tendered under the offer.

The amount includes a consent payment of $50.00 of new notes for those who tender by the consent deadline.

As previously announced, Colt will also pay accrued interest up to but excluding the settlement date in the form of new notes at the rate of $300.00 of notes per $1,000 of accrued interest, rounded down to the nearest $1,000.

Possible pre-packaged plan

Colt is soliciting consents to approve a pre-packaged plan of reorganization as an alternative to the exchange offer.

In addition, the issuers are soliciting consents to amend the indenture governing the existing notes to eliminate or waive substantially all of the restrictive covenants, eliminate certain events of default, modify covenants regarding mergers and consolidations, and modify or eliminate certain other provisions.

Holders who tender will be deemed to have delivered consents.

Completion of the exchange is conditioned on at least 98% of the existing notes being tendered.

If the conditions are not met or waived, Colt said it “would need to determine whether it would be more advantageous to file petitions under Chapter 11 of the Bankruptcy Code to consummate a pre-packaged plan of reorganization.”

The pre-packaged plan would exchange all of the old notes plus accrued interest for new notes.

Colt said the pre-packaged plan will have the same effect as the exchange with a 100% response rate except that the consent payment will only be payable on successful completion of the exchange.

Previously in the restructuring, Colt refinanced its $70 million senior secured term loan in November and $33 million senior secured term loan in February.

The company said that the exchange is intended to reduce its debt and cash interest payments, extend the maturity of its borrowings and “place Colt in a better position to attract new financing in the years to come.”

KCC (888 251-3076, banks and brokers call 917 281-4800) is information agent and exchange agent.

Colt Defense is a West Hartford, Conn., manufacturer of firearms.

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