The Aerostructures Corp. has landed a new $165 million credit despite tough times for the aerospace industry and tight credit markets. The company needed the new facility in anticipation of an upcoming March 2003 maturity on its existing $75 million revolver, said Dev Kapadia, a principal at The Carlyle Management Group, which owns Aerostructures. The new loan did not come without concessions, however, as the pricing on the deal was flexed up 50 basis points during syndication on both the revolver and institutional tranches.
The credit includes a $130 million, six-year term "B" priced at LIBOR plus 41/ 4% and a $35 million, five-year revolver priced at LIBOR plus 33/ 4%. Kapadia said the reasons for the flex included the weakness in the aerospace sector, the tight credit markets and the implications of a war with Iraq on the designer and manufacturer of aerospace structures, which serves primarily the commercial sector. "The demand for new airplanes is not as solid as it was in the past," he said. As the incumbent lead arranger and relationship bank, Lehman Brothers was chosen again to lead the deal.
Aerostructures was acquired by The Carlyle Group in 1996 and entered into a new $300 million credit facility in 1998 to refinance its initial debt as well as fund the acquisition of Contour Aerospace. The former facility comprises a $130 million pro rata piece priced at LIBOR plus 21/ 2%, a $130 million "B" piece set at 23/ 4%, and a $40 million second lien "C" piece with LIBOR plus 33/ 4% pricing. "The management team's strategy and focus is clearly to reduce debt," said Kapadia, commenting on the decreased level of debt with the new facility.