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Colt's mediation continues - good news for company.

The mediator in Colt's bankruptcy reorganization talks reported to the court on April 8 as required. His report, however, stated that all parties agree mediation should continue through April.

Mediator Thomas H. Jackson, vice president and provost of the University of Virginia, is prohibited from sharing the negotiations with the court. Colt's would like that restriction lifted but other parties would not agree.

"Colt's finances are much better than when we went into Chapter 11 last year, so the heat is off reaching a settlement," said Colt's President Ron Whitaker. "I'd rather see profits going back into the company than into litigation."

In the 1990 leveraged buyout Colt's split into two entities. Colt's Manufacturing Company owns the "bricks and mortar," while Colt's Partnership owns the name and intellectual properties. Colt's Manufacturing took a $10 million note from the Partnership and pledged it to the bank for debtor and possession financing. Since no payment has been made to the Austrian bank Creditanstalt-Bankverein, the bank has asked the U.S. Bankruptcy Court in Hartford to foreclose its loan to the Colt's Partnership.

"We believe they need our approval to foreclose and we have not given approval," Whitaker said. "Another lawsuit will simply confuse the issue, rather than helping us to get out of Chapter 11 as soon as possible. I'm told this would be a simple reorganization if it weren't for all the lawsuits."

In happier news, the U.S. Army and Colt's Manufacturing are negotiating a contract for 18,500 M-14 carbines -- a short-barreled version of the M-16. The value of the contract is nearly $8 million. This could be the first in a three-phase program that Colt's estimates to add up to 50,800 rifles valued at as much as $25 million. Whitaker expects to sign the contract this summer.
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Title Annotation:Colt's Manufacturing Company Inc.
Author:Clede, Bill
Publication:Shooting Industry
Date:Jun 1, 1993
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