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gruntled
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U.S.-Based Buyer of British Guns Business Lacks Cash Oct 13, 2001 (Financial Mail on Sunday - Knight Ridder/Tribune Business Newsvia COMTEX) -- The tiny US company that bought the Smith & Wesson guns businessfrom engineering group Tomkins earlier this year has warned that it might nothave enough cash to pay for the deal.Saf-T-Hammer Corporation - which makes safety devices for guns - agreed to pay$15 million (UKpound 10 million) for Smith & Wesson, with $5 million paidimmediately. The remaining $10 million is due next May.But in a filing to the US Securities & Exchange Commission, Saf-T-Hammer haswarned: "The company has limited available funds, which may not be adequate tofund the company's operations and service its debt obligations."Elsewhere in the filing, the company said: "Management is seeking to obtainfinancing from various sources. There can be no assurance that additionalcapital will be available to the company on reasonable terms, if at all."The latest financial figures for the US group showed it had total assets worth$81 million, but liabilities of almost $83 million.The group was able to make the initial payment of $5 million to Tomkins only byborrowing the cash from Colton Melby, an aerospace entrepreneur from Washingtonstate.Saf-T-Hammer shares peaked at $1.51 soon after it bought the world famousgun-making business in May, but the stock has since slumped to 74 cents.The Smith & Wesson business was sold off as part of a refocusing of Tomkins byexecutive chairman David Newlands.The company is still without a chief executive after Greg Hutchings was ousted ayear ago.Saf-T-Hammer is paying nine per cent interest a year on the outstanding $10million.If it fails to pay on the due date next May, the interest rate will instantlyjump to 11 per cent.A spokesman for Tomkins said the group was aware of the filing to the SEC bySaf-T-Hammer but the state-ments were "standard risk warnings" typical of thehighly cautious US system of reporting.In the longer term, Saf-T-Hammer is also due to repay Tomkins for Smith & Wessondebts and must pay a further $30 million by 2011.(c) 2001, Financial Mail on Sunday, London. Distributed
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