When Colt’s Manufacturing Company signed a deal in 2011 with Osceola County, FL to open a “regional headquarters and product manufacturing center,” it was reported the company would employ more than 60 people at that site. But, more than halfway through 2013, the facility still stands empty.
According to news reports, Colt’s Manufacturing has yet to take possession of the facility and it appears that none of those promised jobs have materialized. With an end-of-the-year deadline looming in the contract between Colt and Osceola County, it is being reported that Colt’s lender, not the company, is working out an agreement to get things back on track.
What is going on? Will Colt ultimately abandon the deal?
In the fourth quarter of 2011, Colt’s Manufacturing reached an agreement with Osceola County and the State of Florida. In the agreement, Colt’s Manufacturing would open a regional headquarters and manufacturing facility in an old building owned by the county. Colt’s Manufacturing expected to employ more than 60 new workers with an average wage of more than $45,000/year.
In return, Osceola County agreed to renovate the aging facility for Colt, including the installation of a new HVAC and ventilation system for an indoor shooting range. Additionally, the county would lease the property to Colt’s Manufacturing for $1/year for the first five years.
The State of Florida agreed to kick in $250,000 from a fund designed for stimulating business development. Additionally, the state agreed to contribute additional money for workforce training.
Valencia College, a local community college, was to develop a specialized training program for Colt’s Manufacturing.
According to press releases and news reports, Colt’s Manufacturing was supposed to take possession of the building in 2012 and begin hiring new workers. All of the employees were expected to be hired during the first three years of Colt’s Manufacturing’s lease of the building.
Osceola County upgraded the facilities, but Colt’s Manufacturing never moved in. Employees were never hired.
News 13, an Orlando news station, contacted Colt’s Manufacturing in May 2013 and asked when the company was planning to occupy the facility. News 13 received this response:
We are looking at numerous states, Florida is among them. There are no proposals with any state or locality.
News 13 followed up and asked about the existing agreement with Osceola County, and received a statement saying the company would not comment about the “future business plans of the company.”
Enter Colt Defense
In July 2013, Colt Defense acquired New Colt Holding Corp., the parent company of Colt’s Manufacturing Company. Approximately one decade earlier, Colt Defense split away from New Colt Holding Corp. Colt Defense dealt with government markets with a special emphasis on military weapons. Colt’s Manufacturing focused on civilian firearms sales. With the acquisition, all markets are once again handled by a single company.
Colt’s Manufacturing, the civilian sales company, was the entity that entered into the agreement with Osceola County. Now that Colt Defense has acquired New Colt Holding Corp., will Colt Defense remain obligated to fulfill the Colt’s Manufacturing agreement with Osceola County?
Speaking to a former Florida trial attorney who specialized in business law, I was told that generally Colt Defense would have to honor the deal. However, Colt Defense may not have to hold up Colt’s Manufacturing end of the deal depending on how the acquisition of New Colt Holding Corp. was made, the specifics of the contract with Osceola County and other details.
All Is Not Lost
During the August 5, 2013 Osceola County Board of Commissioners meeting, Commissioner John Quiñones reported that his office had been in contact with a representative of Colt (presumably Colt Defense.) Quiñones stated that Colt was “…still within the boundaries of the contract…” and that they would have to “…see how [this] pans out.”
It is certainly within reason that Colt’s Manufacturing might delay a move into the new facility while the acquisition was worked out. Now that the companies are all consolidated under one banner, Colt could move forward and open the facility.
However, there is an odd aspect to this story.
In an August 5, 2013 article in the Orlando Sentinel, David Breen wrote that county commissioners approved a landlord agreement between Osceola County and Colt’s lender – not the company. From the article:
The agreement, which is between the county and Colt’s lender — but not Colt itself — calls for the county to serve as the company’s landlord at the Shady Lane building near Kissimmee through January 2023.
County Manager Don Fisher called the agreement an incremental step that Colt had to take to get bank financing and indicates that the company is still interested in Osceola.
It was not immediately clear who the lender was.
In an August 9 earnings call, Colt Defense discussed the acquisition of New Colt Holding Corp. and stated that it was financed in part by a lender. The person or entity providing the money for the acquisition was not named. Additionally, when asked directly about the Florida facility, Colt Defense representatives stated they would not comment about it.
If Colt Defense is to fulfill the Colt’s Manufacturing arrangement with Osceola County, they have until the end of 2013 to do so. With the lender talking directly with the county commissioners, it would seem to me that the company is likely to satisfy their end of the agreement.
If Colt walks away from the deal, both the State of Florida and Osceola County may seek compensation for the taxpayer money that has been invested into the arrangement.