Let me preface this by saying I am a big fan of Colt firearms and the history of this great American brand.
I was digging around in fixed income offerings today in the secondary market and saw Colt Defense LLC unsecured bonds (mature in 2017) trading in the 40s. (These were part of a $250 million capital raise only a short while ago). That would be a $400 price tag per each $1000 bond. The implied yield on these things were north of 40% per annum.
Company analysis by private third party groups stated that revolving credit lines cannot be maximized due to covenants and that should market conditions deteriorate(military contracts), physical asset and liabilities would roughly equate to where that these bonds are trading now.
The bond market always knows what seems to happen before anyone else. I hope they are wrong but I feel they are right. Chapter 7 or 11 doesn't matter for me, not worth the headache.
I think that there will probably be Colt products in the future, but it won't be the Colt of the past.
p.s. I passed on the bonds btw. I think I am going to get a Gold Cup or two. Always wanted one. Looks like it might be my last chance to get one at a decent price. And I know those don't go to zero.
I was digging around in fixed income offerings today in the secondary market and saw Colt Defense LLC unsecured bonds (mature in 2017) trading in the 40s. (These were part of a $250 million capital raise only a short while ago). That would be a $400 price tag per each $1000 bond. The implied yield on these things were north of 40% per annum.
Company analysis by private third party groups stated that revolving credit lines cannot be maximized due to covenants and that should market conditions deteriorate(military contracts), physical asset and liabilities would roughly equate to where that these bonds are trading now.
The bond market always knows what seems to happen before anyone else. I hope they are wrong but I feel they are right. Chapter 7 or 11 doesn't matter for me, not worth the headache.
I think that there will probably be Colt products in the future, but it won't be the Colt of the past.
p.s. I passed on the bonds btw. I think I am going to get a Gold Cup or two. Always wanted one. Looks like it might be my last chance to get one at a decent price. And I know those don't go to zero.