Colt Avoids Loan Default

In mid-November, Colt Defense LLC owed $10.9 million to its bondholders and notified the Securities and Exchange Commission that it might not be able to make the payment. Although there was a 30-day grace period, the future of the venerable West Hartford, Conn., gunmaker, founded in 1836 by Samuel Colt, was uncertain if it were to default. Even if Colt could raise the cash, the company was facing another similar payment the next month. Thanks to a $70 million loan from a Morgan Stanley affiliate announced on Nov. 18, the company was able to pay off what was immediately owed bondholders, as well as buy back more than $48 million in debt, giving Colt financial breathing room.

Sales for the gunmaker have slowed-as they have for most makers after last year's record highs. Delays in military contracts also reportedly contributed to Colt's financial shortcomings. Good news, however, was offered through a record "Black Friday" on Nov. 28. The FBI's National Instant Criminal Background Check System reportedly conducted more than 175,000 checks, the second highest daily total since the system was established.