Summary
TransDigm Group Inc. (TDG) announced on October 14, 2016, significant financing activities and a substantial special dividend to shareholders. The company, through its subsidiary TransDigm Inc., entered into an Incremental Term Loan Assumption Agreement, securing an additional $650 million in term loans which were fully drawn, with the potential for up to $500 million more in delayed draw loans. These proceeds are intended to partially fund a tender offer to repurchase the company's 7.50% Senior Subordinated Notes due 2021. In parallel with the debt financing, TDG's Board of Directors authorized a one-time special cash dividend of $24.00 per outstanding share. This move indicates strong confidence from management in the company's financial position and its ability to generate cash flow. Investors should note the increased leverage resulting from the new debt facilities, balanced by the immediate return of capital through the special dividend.
Key Highlights
- 1TransDigm Group Inc. (TDG) secured $650 million in new incremental term loans, fully drawn on October 14, 2016.
- 2An additional $500 million in delayed draw incremental term loans may be borrowed by October 31, 2016.
- 3The new debt facilities are part of an agreement related to the company's Second Amended and Restated Credit Agreement.
- 4Proceeds from the new debt will be used, in part, to repurchase 7.50% Senior Subordinated Notes due 2021 via a tender offer.
- 5TDG's Board declared a one-time special cash dividend of $24.00 per outstanding share of common stock.
- 6The record date for the special dividend is October 24, 2016, with payment expected on November 1, 2016.
- 7The company also announced that funding for the initial $650 million term loan has been received.