Summary
TransDigm Group Inc. (TDG) announced on November 28, 2023, the successful completion of a $2 billion debt offering. This offering comprises $1 billion in 7.125% Senior Secured Notes due December 1, 2031, and $1 billion in new Tranche J term loans maturing February 28, 2031. The company intends to use the net proceeds, along with existing cash, to finance the acquisition of the Electron Device Business of Communications & Power Industries (CPI) and for general corporate purposes, which may include enhancing liquidity, future acquisitions, dividends, or stock repurchases. The company also entered into an amendment to its existing credit agreement to facilitate the incurrence of the new Tranche J term loans. These new loans bear interest at Adjusted Term SOFR plus a 3.25% margin. The issuance of the Notes was made through a private offering to qualified institutional buyers and non-U.S. persons, and they are guaranteed by TransDigm Group and certain subsidiaries, ranking equally with existing senior indebtedness.
Key Highlights
- 1Completed issuance of $2 billion in new secured debt: $1 billion Senior Secured Notes (7.125% due 2031) and $1 billion in new Tranche J term loans (maturing Feb 2031).
- 2Debt proceeds to fund the acquisition of CPI's Electron Device Business and for general corporate purposes.
- 3New Tranche J Term Loans bear interest at Adjusted Term SOFR + 3.25% margin and were fully drawn on November 28, 2023.
- 4Senior Secured Notes were issued privately to qualified buyers under Rule 144A and Regulation S.
- 5Notes are guaranteed by TransDigm Group and certain subsidiaries on a senior secured basis.
- 6Indenture includes covenants limiting additional indebtedness, certain investments, asset sales, and other corporate actions.
- 7The Notes will remain outstanding even if the CPI acquisition is not consummated.