TransDigm tapped Credit Suisse and Bank of America for $230 million in add-on loans to back its acquisition of Seattle-based Aviation Technologies for approximately $430 million. "It's a pretty good, B1 rated credit," said one buysider already invested in the Cleveland-based designer, producer and supplier of aircraft components.
The new debt consists of a $180 million tack-on to its existing term loan. The company is also seeking a $50 million increase to its existing revolver, which it does not expect to draw on to finance the transaction. Pricing is LIBOR plus 2%, according to an investor. The company announced Jan. 17 it also plans to issue $250 million of senior subordinated notes to finance the remainder of the transaction, which will be tacked-on to $275 million of existing notes it entered into in June.
CS and B of A led a refinancing for TransDigm in June. The existing deal consists of a six-year, $150 million revolver and a seven-year, $650 million covenant-lite "B" term loan, both priced at LIBOR plus 2% (CIN, 6/9). Moody's Investors Service confirmed all ratings for the company, including the B1 corporate family rating, the Ba3 rating on the amended credit facility and the B3 rating on the company's notes. The ratings reflect substantial debt levels and high leverage, increased from the debt financed acquisition. Pro forma debt to EBITDA, leverage will increase from about 4.8 times to 5.5 times, according to Moody's. Calls to Gregory Rufus, TransDigm cfo, and a spokesman for Aviation Technologies were not returned.