Kratos Announces Completion of Refinancing Transaction
February 22 2022 - 4:01PM
Kratos Defense & Security Solutions, Inc. (Nasdaq:KTOS), a
leading National Security Solutions provider, today announced the
refinancing of its outstanding $90 million Revolving Credit
Facility and $300 million 6.5% Senior Secured Notes, with a new
5-year $200 million Revolving Credit Facility and 5-year $200
million Term Loan A (collectively, the “New Credit Facility”). The
Company has drawn approximately $200 million under the Term Loan A
and $100 million on the new Revolving Credit Facility, with $100
million remaining in borrowing capacity. Mandatory amortization on
the Term Loan A is 2.5% in each of the first and second years and
5.0% in each of the third, fourth and fifth years, with the
remaining outstanding balance due at maturity. Based on the current
borrowing rates under the New Credit Facility and the current
amount drawn, the Company expects to save approximately $10 to $13
million in cash interest payments annually. The redemption of the
Company’s outstanding $300 million 6.5% Senior Secured Notes due
November 2025 is expected to close on March 14, 2022 (the
“Redemption Date”), for an amount of cash equal to 103.25% of the
principal amount thereof plus accrued and unpaid interest thereon
to, but excluding, the Redemption Date (the “Redemption Offer”).
As a result of the refinancing of the Company’s
existing 6.5% Senior Notes and the existing Revolving Credit
Facility, the Company expects to record one-time charges of
approximately $13 to $15 million in its fiscal first quarter,
comprised of the 3.25% call premium and the write-off of the
deferred financing costs associated with the original financing
transactions.
Deanna Lund, Kratos’ Executive Vice President
and Chief Financial Officer, said, “The cost of this refinancing
including the call premium is expected to be recouped in
approximately 12 months, with expected savings of approximately $10
to $13 million in cash interest payments annually, based on current
interest rates and the amount currently drawn. This refinancing
further positions Kratos to remain focused internally – on
executing our strategic plan and continuing to make targeted
investments to organically grow the business.”
Eric DeMarco, President and CEO of Kratos, said,
“Kratos’ mission is to rapidly develop and deliver the right
products and systems at an affordable cost to our customers, which
we believe is a winning business model for all of our stakeholders.
This successful refinancing by Deanna and her team is an incredibly
positive event for the entire Kratos enterprise.”
Truist Securities, Inc. was the lead arranger
for Kratos’ New Credit Facility.
About Kratos Defense & Security
Solutions
Kratos Defense & Security Solutions,
Inc. (NASDAQ:KTOS) develops and fields transformative,
affordable technology, platforms, and systems for United States
National Security related customers, allies, and commercial
enterprises. Kratos is changing the way breakthrough
technologies for these industries are rapidly brought to market
through proven commercial and venture capital backed approaches,
including proactive research, and streamlined development
processes. At Kratos, affordability is a technology, and
we specialize in unmanned systems, satellite communications,
cyber security/warfare, microwave electronics, missile defense,
hypersonic systems, training and combat systems and next generation
turbo jet and turbo fan engine development. For more information go
to www.kratosdefense.com.
Notice
Regarding
Forward-Looking
Statements
All statements in this press release are made as
of February 22, 2022. Except as required by applicable law, Kratos
undertakes no obligation to publicly update or revise these
statements, whether as a result of new information, future events
or otherwise. This press release may contain “forward-looking
statements” within the meaning of federal securities laws,
including statements related to the expected timing, final terms
and completion of the Redemption Offer, the expected reduction in
annual interest expense to be realized by the Company as a result
of the Redemption Offer and the recently completed refinancing
transaction and similar statements concerning anticipated future
events and expectations that are not historical facts. Kratos
cautions you that these statements are not guarantees of future
performance and are subject to numerous evolving risks and
uncertainties that Kratos may not currently be able to accurately
predict or assess, including the risk that Kratos is unable to
redeem all of the Senior Secured Notes in the Redemption Offer,
within the anticipated timeline or at all, risks associated with
fluctuations in the financial markets and other risks and
uncertainties that are described in further detail in Kratos’
reports filed with the Securities and Exchange Commission,
including Kratos’ Annual Report on Form 10-K for the fiscal year
ended December 26, 2021. There can be no assurance that the
Redemption Offer transaction will be completed, or that the
expected annual savings of interest expense will be realized as
described herein or at all. Any of these factors could cause actual
results to differ materially from expectations Kratos expresses or
implies in this press release.
Press
Contact:Yolanda White858-812-7302 Direct
Investor
Information:877-934-4687investor@kratosdefense.com
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