Item 1.01.
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Entry into a Material Definitive Agreement.
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Issuance of Senior Subordinated Notes;
Indenture
On May 8, 2018, TransDigm UK Holdings plc (TD UK), a wholly-owned subsidiary of TransDigm Inc.
(TransDigm), which is a wholly-owned subsidiary of TransDigm Group Incorporated (TD Group), issued $500 million in aggregate principal amount of 6.875% Senior Subordinated Notes due 2026 (the Notes) at an
issue price of 99.240% of the principal amount thereof in a private offering to qualified institutional buyers in accordance with Rule 144A under the Securities Act of 1933 (the Securities Act) and to persons outside the United States
under Regulation S under the Securities Act.
The Notes were issued pursuant to an indenture, dated as of May 8, 2018 (the
Indenture), among TD UK, as issuer, TransDigm, TD Group and the subsidiaries of TransDigm named therein (the Company Guarantors and, collectively with TransDigm and TD Group, the Guarantors), as guarantors, and
The Bank of New York Mellon Trust Company, N.A., as trustee.
The Notes bear interest at the rate of 6.875% per annum, which accrues from
May 8, 2018 and is payable semiannually in arrears on May 15 and November 15 of each year, commencing on November 15, 2018. The Notes mature on May 15, 2026, unless earlier redeemed or repurchased, and are subject to the
terms and conditions set forth in the Indenture.
TD UK may redeem some or all of the Notes at the redemption prices and on the terms
specified in the Indenture. If TD UK, TD Group or TransDigm experiences specific kinds of changes in control or TD Group or any of its restricted subsidiaries sells certain of its assets, then TD UK must offer to repurchase the Notes on the terms
set forth in the Indenture.
TD UK may redeem the Notes in whole, but not in part, at any time, if as a result of any changes in tax laws
or its interpretation, it becomes obliged to pay any Additional Amounts (as defined in the Indenture). If TD UK decides to redeem the Notes following such change, it must redeem the Notes at a price equal to the principal amount of the Notes plus
accrued and unpaid interest to the date of redemption and all Additional Amounts, if any. All payments made by TD UK or any Guarantor with respect to the Notes or guarantees will be made without withholding or deduction for taxes unless required by
law. If TD UK or any Guarantor is required by law to withhold or deduct for such taxes with respect to a payment to the holder of Notes, TD UK or the applicable Guarantor, as the case may be, will pay such Additional Amounts necessary so that the
net amount received by any holder of Notes after the withholding or deduction is not less than the amount that such holder would have received in the absence of the withholding or deduction, subject to certain exceptions.
The Notes are subordinated to all of TD UKs existing and future senior debt, rank equally with all of its existing and future senior
subordinated debt and rank senior to all of its future debt that is expressly subordinated to the Notes. The Notes are guaranteed on a senior subordinated unsecured basis by the Guarantors. The guarantees of the Notes are subordinated to all of the
Guarantors existing and future senior debt, rank equally with all of their existing and future senior subordinated debt and rank senior to all of their future debt that is expressly subordinated to the guarantees of the Notes. The Notes are
structurally subordinated to all of the liabilities of TransDigms
non-guarantor
subsidiaries (other than TD UK).
The Indenture contains certain covenants that, among other things, limit TD Groups ability, and the ability of certain of its
subsidiaries, to incur additional indebtedness, pay dividends or make distributions or certain other restricted payments, purchase or redeem capital stock, make investments or extend credit, engage in certain transactions with affiliates, engage in
sale-leaseback transactions, consummate certain assets sales, effect a consolidation or merger, or sell, transfer, lease or otherwise dispose of all or substantially all assets, or create certain liens and other encumbrances on assets. The Indenture
contains events of default customary for agreements of its type (with customary grace periods, as applicable) and provides that, upon the occurrence of an event of default arising from certain events of bankruptcy or insolvency with respect to TD
UK, TD Group or TransDigm, all outstanding Notes will become due and payable immediately without further action or notice. If any other type of event of default occurs and is continuing, then the trustee or the holders of at least 25% in principal
amount of the then outstanding Notes of a particular series may declare all Notes of such series, to be due and payable immediately.
Registration Rights Agreement
In connection with the issuance of the Notes, TD UK, the Guarantors, and Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC,
Morgan Stanley & Co. LLC and RBC Capital Markets, LLC, as representatives for the initial purchasers listed therein, entered into a registration rights agreement relating to the Notes, dated May 8, 2018 (the Registration Rights
Agreement). Under the Registration Rights Agreement, TD UK and the Guarantors agreed, for the benefit of the holders of the Notes, that they will file with the Securities and Exchange Commission (the SEC) within 255 days after the
date the Notes were issued, and use their commercially reasonable efforts to cause to become effective within 345 days after the date the Notes were issued, one or more registration statements (collectively, the exchange offer registration
statement) relating to an offer to exchange the Notes for an issue of
SEC-registered
notes (the Exchange Notes) with terms identical to the Notes (except that the Exchange Notes will not be
subject to restrictions on transfer or to any increase in annual interest rate as described below).
Under certain circumstances,
including, if applicable, interpretations of the staff of the SEC, if TD UK and the Guarantors are not permitted to effect the exchange offer, TD UK and the Guarantors will use their reasonable best efforts to cause to become effective one or more
shelf registration statements (collectively, the shelf registration statement) relating to resales of the Notes and to keep such shelf registration statement effective until the second anniversary of the date such shelf registration
statement becomes effective, or such shorter period that will terminate when all Notes covered by such shelf registration statement have been sold.
If the exchange offer registration statement is not filed on or prior to the 255th day after May 8, 2018, the shelf registration
statement is not filed within 60 days after the date on which the obligation to file the shelf registration statement arises, the exchange offer registration statement or, if required, the shelf registration statement is not declared effective by
the SEC on or prior to the 345th day after May 8, 2018, the exchange offer is not completed within 40 days after the effective date of the exchange offer registration statement (or, if required, the shelf registration statement is not declared
effective within 60 days after the filing of the shelf registration statement), or after either the exchange offer registration statement or the shelf registration statement is declared or becomes effective, such registration statement ceases to be
effective or usable, TD UK will pay additional interest at the rate of $0.05 per week per $1,000 principal amount of transfer restricted Notes for the first
90-day
period immediately following, and increasing
by an additional $0.05 per week per $1,000 principal amount of transfer restricted Notes for each subsequent
90-day
period, up to a maximum additional rate of 1.0% per annum thereafter until the exchange offer
is completed, the shelf registration statement is declared effective or the obligation to complete the exchange offer and/or file the shelf registration statement terminates, at which time the interest rates will revert to the applicable original
interest rates on the date the Notes were originally issued.
The above summaries of the Indenture and the Registration Rights Agreement
are qualified in their entirety by reference to the Indenture and the Registration Rights Agreement, which are attached hereto as Exhibits 4.1 and 4.3 respectively, and are incorporated herein by reference.