Colt Defense looks to modify plan amid loss of $15 million commitment

By Caroline Salls

Pittsburgh, Jan. 6 – Colt Defense LLC requested court approval to make changes to its confirmed plan of reorganization, according to a motion filed Tuesday with the U.S. Bankruptcy Court for the District of Delaware.

Colt said Sciens Capital Management LLC indicated shortly after the plan confirmation hearing that it would not be able to fund its $15 million offering commitment by the funding deadline set in the company’s equity commitment agreement.

Sciens failed to fund its commitment on Dec. 28, the motion said, resulting in a default under the commitment agreement.

Colt said the parties to the equity commitment agreement deemed it in the company’s best interests to maintain related settlements and consensually exercise their rights in terms of the timing and amount of Sciens’ contribution under the confirmed plan.

According to the motion, Colt’s debtor-in-possession lenders accommodated these goals by extending the maturity of the DIP facilities to Jan. 31 from Dec. 29.

Additionally, in return for these concessions, Sciens agreed to support the effective date of the confirmed plan occurring by Jan. 11, regardless of its ability to participate in the offering and helped Colt and other parties in finalizing the terms of a West Hartford facility lease extension.

Colt said the proposed modifications to the confirmed plan may reduce the total amount raised through the offering to between $45 million and $50 million as of the plan effective date from $50 million and reallocate the amounts committed under the equity agreement as of the effective date.

The company said Sciens will generally be given the opportunity to purchase at least $1 million of offering units by Jan. 8 and, if it purchases at least $2.6 million of offering units, will be given the opportunity to purchase additional offering units by Feb. 8.

To ensure that the offering will raise at least $45 million as of the plan effective date, members of a consortium agreed to purchase offering units in an amount equal to the difference between $10 million and Sciens’ effective date contribution.

Colt said any adjustments to cash available on the effective date will not adversely impact its ability to emerge from Chapter 11, to pay post-effective date obligations and to comply with liquidity covenants in its exit facilities.

Also, the company said resolicitation of votes on the confirmed plan is unnecessary because the “modifications do not materially and adversely affect the consideration provided to creditors under the confirmed plan or the debtors’ ability to make distributions under the confirmed plan.”

A hearing is scheduled for Jan. 11.

Colt Defense, a West Hartford, Conn., manufacturer of firearms, filed for bankruptcy on June 14, 2015. The Chapter 11 case number is 15-11296.

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