[April 14, 2015] |
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Colt Defense LLC Launches Restructuring Transaction
On April 14, 2015, Colt Defense LLC ("Colt" or the "Company") and Colt
Finance Corp. ("Colt Finance" and together with Colt, the "Issuers")
announced that they have commenced an exchange offer (the "Exchange
Offer") for their 8.75% Senior Notes due 2017 (the "Old Notes") and
related guarantees.
The Exchange Offer is part of Colt's strategy to restructure its balance
sheet, which began with the refinancing of Colt's $70.0 million senior
secured term loan in November 2014 and $33.0 million senior secured term
loan facility in February 2015. The Exchange Offer and the issuance of
the New Notes are designed to reduce the overall amount of Colt's debt,
reduce total cash interest payments, extend the maturity for the debt
exchanged, and place Colt in a better position to attract new financing
in the years to come. The Company believes the Exchange Offer will also
improve its performance and customer relations by addressing the key
issues relating to Colt's viability as a going concern.
The Exchange Offer will offer Colt's and Colt Finance Corp.'s 10.0%
Junior Priority Senior Secured Notes due 2023 (the "New Notes") and
related guarantees for any and all outstanding Old Notes. The New Notes
will mature on November 15, 2023. Unlike the Old Notes, which are
unsecured obligations of Colt and its subsidiary guarantors, the New
Notes will be secured by certain junior liens on substantially all of
the Issuers' assets. Interest on the New Notes will accrue from the
issue date of the New Notes at the rate of 10.00% per annum in cash.
The closing of the Exchange Offer is conditioned upon, among other
things, the valid tender of no less than 98% of the aggregate principal
amount of Old Notes (the "Minimum Tender Condition"). In the event that
the conditions to the Exchange Offer are not satisfied and such
conditions are not waived by Colt, Colt would need to determine whether
it would be more advantageous to file petitions under Chapter 11 of the
Bankruptcy Code to consummate a prepackaged plan of reorganization (the
"Prepackaged Plan"). Therefore, Colt and its subsidiaries are
simultaneously soliciting holders of the Old Notes to approve the
Prepackaged Plan as an alternative to the Exchange Offer. If the
restructuring is accomplished through the Prepackaged Plan, 100% of the
Old Notes, plus accrued and unpaid interest, will be cancelled and
holders of the Old Notes will receive their pro rata share of the New
Notes. Colt, however, has not made any affirmative decision to proceed
with any bankruptcy filing at this time.
The Exchange Offer
Pursuant to the Exchange Offer, holders of Old Notes who validly tender
their Old Notes on or prior to midnight, New York City time, on May 11,
2015, unless extended by the Issuers (such time and date, as the same
may be extended, the "Consent Expiration Time"), and whose Old Notes are
accepted by the Issuers in the Exchange Offer, will receive New Notes in
the amount set forth in the table below, which includes the Consent
Payment (as defined below), under the column "Total Consideration."
Holders who validly tender their Old Notes after the Consent Expiration
Time but on or prior to midnight, New York City time, on May 11, 2015
unless such date is extended by the Issuers (such time and date, as the
same may be extended, the "Expiration Date"), and whose Old Notes are
accepted by the Issuers in the Exchange Offer, will receive the New
Notes in the amount set forth in the table below under the column
"Exchange Consideration," but will not be eligible to receive the
Consent Payment.
CUSIP
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Outstanding Principal Amount (in millions)
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Title of Old Notes to be Tendered
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Title of New Notes to be Issued
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Exchange Consideration(1)
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Consent Payment(2)
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Total Consideration(1)
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19686TAA5
19686TAC1
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$250.0
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Colt's 8.75% Senior Notes due 2017
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Colt's 10.0% Junior Priority Senior Secured Notes due
2023
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$300 in New Notes
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$50 in New Notes
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$350 in New Notes
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(1) Per $1,000 principal amount of Old Notes and excluding
accrued and unpaid interest. Holders of Old Notes validly tendered (and
not validly withdrawn) and accepted by Colt in the Exchange Offer will
be entitled to receive accrued and unpaid interest, if any, on their
exchanged Old Notes up to, but not including, the settlement date in the
form of New Notes in the following amounts: per $1,000 of accrued and
unpaid interest on their accepted Old Notes, holders will receive $300
in principal amount of New Notes and the total principal amount of such
New Notes will be rounded down to the nearest $1,000 principal amount of
such New Notes. Such amount will be in addition to the Exchange
Consideration or Total Consideration that such holder would receive in
the Exchange Offer and the Consent Solicitation, as applicable.
(2) Each holder who validly tenders and does not validly
withdraw Old Notes, and thereby delivers consent to the Proposed
Amendments and votes to accept the Prepackaged Plan, on or prior to the
Consent Expiration Time, will be entitled, subject to the satisfaction
or waiver of the conditions to the consummation of the Exchange Offer
and the Consent Solicitation, to a Consent Payment of $50 in principal
amount of New Notes per $1,000 principal amount of Old Notes and
integral multiples thereof validly tendered and not validly withdrawn by
such holder (the "Consent Payment"). In order to determine the Consent
Payment, the principal amount of the Old Notes tendered will be rounded
down to the nearest $1,000.
In connection with the Exchange Offer, the Issuers are soliciting (the
"Consent Solicitation") the consents (the "Consents") of the holders of
outstanding Old Notes to amend the indenture governing the Old Notes to
eliminate or waive substantially all of the restrictive covenants,
eliminate certain events of default, modify covenants regarding mergers
and consolidations, and modify or eliminate certain other provisions
(the "Proposed Amendments"). Holders who tender their Old Notes pursuant
to the Exchange Offer are obligated to, and are deemed to, consent to
the Proposed Amendments with respect to the entire principal amount of
the Old Notes tendered by such holders.
Throughout the Exchange Offer period, Colt will conduct its business and
operations as usual with no impact on trade vendors, employees,
customers and any related contractual agreements or obligations.
The Prepackaged Plan of Reorganization
Consummation of the Prepackaged Plan through an in-court restructuring
would have principally the same effect as if 100% of the holders of Old
Notes had tendered their Old Notes in the Exchange Offer, except the
Consent Payment will only be payable upon successful completion of the
Exchange Offer. To obtain requisite acceptance of the Prepackaged Plan
by virtue of the Bankruptcy Code's plan confirmation requirements,
holders of the Old Notes representing at least two-thirds in amount and
more than one half in number of those who actually vote must accept the
plan.
In the event Colt decides to proceed with a prepackaged bankruptcy
filing, it will continue to conduct its business and operations in the
ordinary course. Moreover, trade creditors, vendors, and customers will
be unaffected by the Prepackaged Plan and will continue to be paid in
the ordinary course of business; union related agreements will also be
unaffected and employees will be paid all wages, salaries and benefits
on a timely basis.
Participating in the Exchange Offer and Voting on the Prepackaged Plan
The Exchange Offer and the Consent Solicitation will expire at the
Expiration Date, unless extended. Tenders of Old Notes may be withdrawn
and the Consents may be revoked on or prior to midnight, New York City
time, on May 11, 2015, but not thereafter, unless such deadline is
extended by the Issuers. As noted above, the Consent Payment will only
be payable to holders of Old Notes who validly tendered their Old Notes
on or prior to the Consent Expiration Time. Votes to accept or reject
the Prepackaged Plan must be received on or prior to midnight, New York
City time, on May 11, 2015 unless the solicitation period is extended by
the Issuers (such time and date, as the same may be extended, the
"Voting Deadline"). Holders who vote to accept or reject the Prepackaged
Plan but do not participate in the Exchange Offer may modify their votes
on or prior to the Voting Deadline.
Holders may vote to accept the Prepackaged Plan without tendering their
Old Notes in the Exchange Offer and delivering their Consents. However,
Holders tendering their Old Notes in the Exchange Offer must vote to
accept the Prepackaged Plan or else the tender of such Old Notes will be
deemed not valid. Holders who tender their Old Notes in the Exchange
Offer will also be deemed to have delivered Consents to the Proposed
Amendments
The New Notes
The New Notes will not be registered under the Securities Act of 1933,
as amended (the "Securities Act") or state securities laws. The New
Notes may only be transferred or resold in transactions, registered, or
exempt from registration, under the Securities Act and applicable state
securities laws. New Notes issued in the Exchange Offer will have the
same status as the corresponding tendered Old Notes. If tendered Old
Notes are freely tradeable and not subject to restriction on transfer
upon the consummation of the Exchange Offer, the holder of such Old
Notes will receive New Notes that are also freely tradeable securities
and not subject to restriction on transfer. If such Old Notes are
considered a "restricted" security under the securities laws, the holder
of such Old Notes will receive New Notes that will also be considered a
"restricted" security.
Additional Information
The Exchange Offer and the solicitation of the Prepackaged Plan are made
only by, and pursuant to, the terms set forth in the Offer to Exchange,
Consent Solicitation Statement, and Disclosure Statement Soliciting
Acceptances of a Prepackaged Plan of Reorganization (the "Offer to
Exchange and Disclosure Statement"), and the information in this press
release is qualified by reference to the Offer to Exchange and
Disclosure Statement and, as applicable, the accompanying consent and
letter of transmittal, ballots and any supplements thereto
(collectively, the "Restructuring Documents").
KCC is acting as the Information Agent and the Exchange Agent for the
Exchange Offer and the Consent Solicitation and as the Voting Agent for
the solicitation of the Prepackaged Plan. Requests for any of the
Restructuring Documents or questions regarding the Exchange Offer, the
Consent Solicitation or the solicitation of the Prepackaged Plan may be
directed to KCC at 888-251-3076 (toll-free North America) or
917-281-4800 (bankers and brokers).
This press release shall not constitute a solicitation of consents, an
offer to sell or the solicitation of an offer to buy any security and
shall not constitute an offer, solicitation or sale in any jurisdiction
in which such offering, solicitation or sale would be unlawful. No
recommendation is made as to whether holders of the securities should
tender their securities or give their consent.
Forward Looking Statements
This press release contains "forward-looking statements." These
statements about our expectations, beliefs, plans, objectives,
assumptions or future events or our future financial performance and/or
operating performance are not statements of historical fact and reflect
only our current expectations regarding these matters. These statements
are often, but not always, made through the use of words such as "may,"
"will," "expect," "anticipate," "believe," "intend," "predict,"
"potential," "estimate," "plan" or variations of these words or similar
expressions. Our actual actions and results may differ materially from
what is expressed or implied by these statements due to a variety of
factors, including our ability to continue as a going concern; our
dependence on sales to the U.S. government and the Canadian government;
changes to U.S. government and Canadian government spending priorities;
our continued eligibility to contract with the U.S. government and the
Canadian government; the selection by the U.S. military of other arms
manufacturers to manufacture the M4 carbine or any successor weapons;
our inability to compete successfully for contracts that are the subject
of competitive solicitations; the loss of any of our top international
customers; the potential for a strike, other work stoppages or labor
unrest at our manufacturing facilities; our ability to comply with
complex procurement laws and regulations; our ability to adapt to
technological change; our ability to compete in the industries in which
we operate; the potential for our backlog to be reduced or cancelled;
the availability and timely delivery of materials to us by our
suppliers; our ability to manage costs under our fixed-price contracts
effectively; our ability to attract and retain qualified personnel; the
ability to protect our intellectual property rights; fluctuations in
workers' compensation and health care costs for our employees; our
ability to comply with environmental, health and safety laws and
regulations; our ability to maintain and upgrade our manufacturing
capabilities to stay competitive; our ability to comply with covenants
under our revolving credit facility; and the potential for a fire or
other significant casualty to occur at either of our manufacturing
facilities. Forward-looking statements in this press release speak only
as of the date on which they are made and we undertake no obligation to
update or revise any forward-looking statements, whether as a result of
new information, future events or otherwise, except as required by law.
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