West Hartford gun maker Colt Defense LLC said disclosed Thursday that its cash flows and revenue are lower than hoped, and as a result, it may default on interest payments due next week.
Colt said recent declines in demand for sporting rifles and handguns, as well as delays in the timing of U.S. government sales and certain international sales have negatively impacted its forecasts. An interest payment is due Nov. 17 on $10.9 million in senior notes.
The company also expressed uncertainty about whether or not it will be in compliance with its term loan covenants at the end of the year, without a refinancing, amendment or waiver.
Colt said it is in discussions with potential financiers.
The company has delayed its quarterly earnings filing.
Colt expects to report a decrease in net sales for the third quarter ranging from 25 percent to 35 percent.
Bloomberg reported Thursday that Standard & Poors had downgraded Colt to ‘CCC-,’ casting doubt on the company’s prospects of paying down its $308 million in debt.
