Glass
15th June 2015, 04:36 PM
Bankrupt gun maker Colt up for auction. Opening bid: $0
https://s.yimg.com/ea/img/-/150616/2015_06_15t221202z_1_lynxmpeb5e17a_rtroptp_2_usa_g uns_nra_women-1anujl2.jpg
(Reuters) - U.S. gun maker Colt filed for bankruptcy protection on Sunday and has put itself up for sale in an unusual auction with an opening proposal from its current owner.
The bid? Zero dollars.
An affiliate of private equity firm Sciens Capital Management has proposed buying Colt Defense by assuming obligations including up to $105 million (£67 million) in outstanding loans and as much as $20 million in new loans, court documents filed on Monday show.
The so-called stalking horse bid does not involve any cash and sheds $250 million in bonds. In other words, Colt would look much like it does now, only without the bonds.
Normally, when a deeply troubled company like Colt proposes to shed an obligation like its bonds, the owners of the company would lose their investment as well.
That is pretty much what bondholders proposed in May, according to the filings in the U.S. Bankruptcy Court in Wilmington, Delaware. The bondholders sought ownership of Colt in return for eliminating half the bond debt, a move Colt rejected as too risky.
Colt feared bondholder ownership could damage relationships with customers, which include the U.S. government, and might jeopardize the lease on company facilities in West Hartford, Connecticut, its Chief Restructuring Officer Keith Maib said in court documents.
The Colt lease is held by an affiliate of Sciens Capital Management.
Maib said the sale was the only way to avoid a shutdown of the business, which would disrupt critical weapon deliveries to law enforcement, eliminate 800 jobs and put retiree benefits at risk.
Colt declined to comment.
Story Link (https://au.news.yahoo.com/thewest/world/a/28467193/bankrupt-gun-maker-colt-up-for-auction-opening-bid-0/)
https://s.yimg.com/ea/img/-/150616/2015_06_15t221202z_1_lynxmpeb5e17a_rtroptp_2_usa_g uns_nra_women-1anujl2.jpg
(Reuters) - U.S. gun maker Colt filed for bankruptcy protection on Sunday and has put itself up for sale in an unusual auction with an opening proposal from its current owner.
The bid? Zero dollars.
An affiliate of private equity firm Sciens Capital Management has proposed buying Colt Defense by assuming obligations including up to $105 million (£67 million) in outstanding loans and as much as $20 million in new loans, court documents filed on Monday show.
The so-called stalking horse bid does not involve any cash and sheds $250 million in bonds. In other words, Colt would look much like it does now, only without the bonds.
Normally, when a deeply troubled company like Colt proposes to shed an obligation like its bonds, the owners of the company would lose their investment as well.
That is pretty much what bondholders proposed in May, according to the filings in the U.S. Bankruptcy Court in Wilmington, Delaware. The bondholders sought ownership of Colt in return for eliminating half the bond debt, a move Colt rejected as too risky.
Colt feared bondholder ownership could damage relationships with customers, which include the U.S. government, and might jeopardize the lease on company facilities in West Hartford, Connecticut, its Chief Restructuring Officer Keith Maib said in court documents.
The Colt lease is held by an affiliate of Sciens Capital Management.
Maib said the sale was the only way to avoid a shutdown of the business, which would disrupt critical weapon deliveries to law enforcement, eliminate 800 jobs and put retiree benefits at risk.
Colt declined to comment.
Story Link (https://au.news.yahoo.com/thewest/world/a/28467193/bankrupt-gun-maker-colt-up-for-auction-opening-bid-0/)