Colt Defense LLC, the hand-gun maker that skipped an interest payment last month, has entered into a restructuring agreement with loan lenders to provide the necessary funding for a prepackaged bankruptcy plan.
The agreement includes $15 million in debtor-in-possession loans as well as exit financing should Colt go ahead with a prepackaged Chapter 11 case, according to a company statement Monday. Colt also amended terms of its bond exchange offer and will consider commencing the bankruptcy plan if conditions aren’t met.
The West Hartford, Connecticut-based weapons maker has been asking creditors since April to choose between a debt-for-debt exchange that Standard & Poor’s called “deeply distressed” or bankruptcy.
Colt didn’t pay the $10.9 million due May 15 to holders of its $249.4 million of 8.75 percent unsecured notes due November 2017, S&P said last month in a report. The bonds traded at 30.75 cents on the dollar on April 27, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.
Under the amended exchange offer, the noteholders would receive 10 percent junior senior secured notes due 2021 at 45 cents on the dollar, according to Colt’s statement Monday. The expiration date for the debt swap and bondholder consent for the prepackaged plan was extended to June 12.