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Colt's financing extended; secures rifle contract.

Colt's Manufacturing Company of Hartford, Conn., has continued access to its $7 million line of credit under an extension granted by a federal bankruptcy judge. Judge Robert Krechevsky also continued restrictions that give veto power over any reorganization proposal to Colt's bankers, unsecured creditors, workers' union, and other key parties.

CF Intellectual, the partnership that owns Colt's name and patents objected to the extension, along with other parties in the case, on the grounds that the extension "unfairly tips the balance in the case to Creditanstalt."

Jay Teitelbaum, a lawyer for Creditanstalt-Bankverein, Colt's principle lender in Austria, told the court that progress is being made toward an agreement on another financial extension to August 2.

In similar news, Colt's President Ron Whitaker said that the company has secured an $8.6 million contract to supply the U.S. Army with 18,658 M-4 carbines. These are a shorter and lighter version of the M-16 rifle. Deliveries are set to begin in April of 1994.

Whitaker says it's the company's largest rifle contract from the government in five years, but it represents only 10 percent of the company's expected sales volume for 1994. It could stimulate interest in the M-4 among other NATO countries.

Whitaker speculates that the contract will help the company in its Chapter 11 negotiations. "The more orders we can get from the U.S. government, the better off we are," he said. "It makes the business plan more believable by people taking paper instead of hard debt. The government is showing faith in the survivability of Colt's."
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Title Annotation:Colt's Manufacturing Company Inc.
Author:Clede, Bill
Publication:Shooting Industry
Date:Aug 1, 1993
Words:260
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