Refinancing provides greater liquidity, significant cash savings and improved terms…
Astronics corporation (Nasdaq: ATRO), a leading provider of advanced technologies for global aerospace, defense and other mission critical industries, today announced it has amended and expanded its revolving line of credit and refinanced its term loan. The refinancing provides improved liquidity, lower cash costs, and greater financial flexibility for the Company. The refinancing is comprised of an expanded asset-based line of credit and a reduced, lower-cost term loan.
The revolving line of credit was expanded from $115 million to a $200 million maximum subject to the borrowing base, with an interest rate of SOFR plus 2.5% to 3.0% varying based on the Company’s consolidated leverage ratio. At closing, Astronics had $128 million drawn on the facility. HSBC Bank USA, N.A. was the agent for the lending group which included M&T Bank, KeyBank N.A., Webster Bank and BHI USA.
The new $55 million term loan has an interest rate of SOFR plus 5.5% to 6.75% varying based on the Company’s consolidated leverage ratio. Cash amortization of the new term loan will be approximately $550,000 annually, down from the previous rate of approximately $9.0 million. Funds for the term loan were provided by Redwood Capital Management, LLC through certain funds managed by the firm, along with HSBC Private Credit.
David C. Burney, Chief Financial Officer, commented, “This refinancing reflects the progress we are making as a Company by delivering strong sales growth and improving profitability. We expect to have significant cash savings of approximately $10.5 million annually from this refinancing, including an approximate $2.0 million reduction in annual interest expense. The initial weighted average interest rate at current SOFR levels is estimated to be 9.6%, down from our previous blended rate of 11.0%. The new package also offers a significant improvement in liquidity over our previous structure, with available liquidity of approximately $50 million initially, which affords our Company much more operating flexibility than we have had recently.”
The restructured lending agreements also have less restrictive financial covenants, which include a minimum fixed charge coverage ratio of 1.1 to 1.0 and minimum liquidity of the greater of $15 million or 10% of the borrowing base. Both the expanded revolver and the new term loan mature on July 11, 2027.
The new term loan and borrowings on the expanded revolver were used to repay the $80.3 million outstanding on the previous term loan, the 4.0% call premium of approximately $3.2 million and accrued and unpaid interest and fees.
Ruben Kliksberg and Sean Sauler, Co-CIOs of Redwood Capital Management, stated: “We are excited to make this investment in Astronics. We believe that this capital solution will allow the Company to continue on its strategic path as an innovator of advanced technologies for the aerospace and defense industries.”
Third quarter 2024 expenses will include refinancing-related fees, the call premium on the previous term loan and the write-off of deferred financing costs related to the previous financing. These expenses in total are estimated to be $8.0 million.
Terms used, but not defined in this news release are as defined in the Credit Agreements filed on Form 8-k with the Securities and Exchange Commission today.
