Another 11th hour reprieve for Colt's

Shooting Industry, May, 1994 by Dean Speir

Just when industry experts again were preparing beleaguered Colt's last meal, a stay arrived from little-known Zilkha, a family-owned New York investment firm.

In early March, the new plan from Zilkha & Company was filed with the U.S. Bankruptcy Court. The deal would include the purchase of up to 80 percent of Colt's Manufacturing Company Inc. for $12 million, a $20 million line-of-credit and assumption of $24 million in liability.

There also would be, according to an SI source, separate negotiations in which the Connecticut Development Authority (CDA) would acquire the rights to Colt's name from the architect of the original 1990 leveraged buy-out. The name would revert to Colt's in return for certain stock in the new entity. CDA proposed a $12 million investment under the terms of a similar deal last year. That arrangement collapsed when the previous purchaser withdrew due to "animosity and antagonistic behavior" among various secured creditors involved in the bankruptcy case. Several observers privately felt that Interlaken Investment Partners of Greenwich, Conn. -- the last "white knight" -- got cold feet with the passage of the Feinstein "assault weapons" amendment to the Senate Crime Bill.

When Colt's failed to emerge from Chapter 11 by end of 1993, the much sought-after Netherlands M16 contract -- for which it was competing with its Canadian licensee, Diemaco -- re-opened to include the semi-finalists, reportedly IMI and HK. Ultimately, Diemaco was awarded the contract. In an attempt at spin control, one high-level Colt's source offered, "...this is good for us since we'll not only be making something on every unit they ship, but also we'll be manufacturing 15 to 16 parts as a sub-contractor."

Until the timely arrival of the Zilkha family, Colt's had been experiencing a run of bad luck. In addition to the loss of the M16 contract, Colt's had to re-christen its new rimfire pistol after learning Coonan Arms had used the name Cadet a year ago. Worse, Colt's had remaindered its entire stock of All-American Model 2000s to CDNN of Abilene, Texas just before the extraordinary gun-buying boom last fall.

CDNN had no difficulty selling all 6,000 of the discontinued polymer 9x19mm autos. One East Coast distributor wholesaled half the stock in less than four months.

With the filing of the latest reorganization plan, Colt's fortunes may have turned the corner, at last. Along with the M16 components contract, Colt's is busy fulfilling two separate M4 (M16 carbine) contracts for the U.S. military, and, like every firearms manufacturer and importer, selling every gun it can produce.