Fairchild's president Richard Boutelle often argued with the firms directors on the issue of getting into the gun business per se, to no avail. Indeed, back in the summer of 1958 with hopes for AR-10 sales efforts abroad still high and with the Army's enthusiasm for the AR-15 as yet undampened by water-in-the-bore, Boutelle had made an impassioned plea to turn the Armalite plant in California into a real assembly line, to manufacture the AR-10 and AR-15 themselves. The directors had again refused to finance such a venture.
As noted earlier, the Baltimore-based firm of Cooper-MacDonald Inc. represented the Dutch made AR-10 in Asia. In fact, Robert W. "Bobby" MacDonald was something of a specialist in Southeast Asia, having lived and worked there for a number of years. In addition to the AR-10, Cooper-MacDonald had since 1948 represented Colt handguns and later Remington rifles, ammunition and shotguns in that part of the world.
Meanwhile, Fairchild's aircraft business was in serious financial difficulty, and the parent firm was increasingly unable to support the significant investment which the AR-15 program required. Mr. Boutelle accordingly gave Cooper-MacDonald the added task of finding, for a fee, someone to take on the job of tooling up and making the AR-15 under icense. Bobby MacDonald naturally mentioned the matter to his friend, Fred Roff, then sales director and later president of Colt's Patent Firearms Manufacturing Co. of Hartford, Connecticut. Roff was interested, but like most of the other traditional New England gunmakers, Colt's was facing ever-heavier financial losses in the dried-up civilian and military markets of the post-Korean war period. An initial 20-year "letter of understanding" between Colt's and Cooper-MacDonald was put on paperas early as September 22, 1958 regarding "the ArmaLite matter", but it was some months before any actual money could be put together.
As Fairchild's need to salvage some of it's ArmaLite investment grew keener, Colt's veered ever closer to actual bankruptcy. The sobering fact was that the manufacturing plant had not been updated in virtually a century. The firm was at length purchased by a New York financier for merely the value of the inventory of firearms already manufactured but still unassembled.
Ironically the final signing of the arrangement between Colt's new directors and the newly-formed Fairchild Stratos Corporation coincided almost to the day with General Taylor's formal veto of further .22 caliber rifle purchases by the Army. Interestingly, Colt's paid Fairchild Stratos a lump sum of only $75000 plus a royalty of 4 1/2% on all future production for the rights to the AR-15, while for its good offices in putting the deal together Colt's paid Cooper-MacDonald $250,000 plus a royalty of 1% on future production.
