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Colt's new organization made public.

Colt's Manufacturing Company of Hartford, Conn., filed its reorganization plan as expected on Sept. 30, 1992. This does not mean, however, that all details are final.

According to the U.S. Bankruptcy Court, the plan filed is "non-consensual," meaning that not all of the parties involved are in agreement with the details. The Court has given Colt's 60 days to attend the plan as necessary -- which is the equivalent of giving the company a final 60-day extension.

If there is no agreement reached by the end of the 60-day period, Colt's creditors will be allowed to submit their own reorganization plans to the Court.

The reorganization plan filed on Sept. 30 gives unsecured creditors an undetermined amount of equity in the reorganized company. Secured creditors would received secured notes of payment as well as equity in the form of stock in the new Colt's structure.

It is unlikely that the details of this plan will be able to be hammered out until the lawsuit against CF Intellectual Properties is resolved. (See SI Industry News in the November issue.) That lawsuit involves a claimed $4 million patent infringement settlement that is owed CF Intellectual.

In order to make the company more efficient, president Ron Whitaker has asked the State of Connecticut for a loan of $4 million in order to consolidate Colt's operations in a new plant in West Hartford. Whitaker said the consolidation is expected to be complete within one year, and that no jobs will be lost because of the move.

Because of the recent lack of military contracts, Whitaker said, Colt's current facility has too much capacity and is costing the company too much money. Colt's will only remain in its current facility if the company receives enough military contracts to keep production lines moving.

The reorganization plan states that Colt's has several new technologies and products in development, such as a "new firing technology," its government SOCOM pistol, and an enhanced M16 rifle model. Very few details were given about any of these products.

As to the reasons for Colt's financial troubles, the plan states that in 1990 the company was losing $1.4 million a month, but company officials "corrected" that negative cash flow situation to a mere $1.2 million a month in 1991. The plan also stated that Colt's had a "fragmented organization structure, a lack of understanding of and response to market needs, an absence of cost controls, and difficulty in retaining competent management."

The plan also stated that Colt's was behind the times, focusing company production on high-priced revolvers, a declining market, and ignoring the rapidly increasing market for high-capacity, double-action 9mm pistols. The company also noted that increasing imports affected Colt's bottom line, stating that 150,000 imported handguns were bought in 1983, while that number had increased to 650,000 by 1989.
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Title Annotation:Industry News; Colt's Manufacturing Company Inc.
Publication:Shooting Industry
Date:Dec 1, 1992
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