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Item 1.01.
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Entry into a Material Definitive Agreement.
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Issuance of Notes
On April 17, 2020, TransDigm Inc. (“TransDigm”), a wholly-owned subsidiary of TransDigm Group Incorporated (“TD Group”), issued an additional $400 million in aggregate principal amount of 6.25% Senior Secured Notes due 2026 (the “ New Notes”) at an issue price of 101% 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 New Notes are an additional issuance of the Company’s existing 6.25% Senior Secured Notes due 2026 and were issued pursuant to the indenture dated as of February 13, 2019 (as amended, the “Base Indenture”), as supplemented by a third supplemental indenture dated as of April 17, 2020 (the “Supplemental Indenture” and, together with the Base Indenture, the “Indenture”), in each case among TransDigm, as issuer, TD Group, TransDigm UK Holdings plc (“TD UK”) and the subsidiaries of TransDigm named therein as guarantors, The Bank of New York Mellon Trust Company, N.A., as trustee and US collateral agent, and The Bank of New York Mellon, as UK collateral agent, pursuant to which the Company previously issued $4,000 million aggregate principal amount of 6.25% Senior Secured Notes due 2026 (the “Initial Notes” and together with the New Notes, the “Notes”). The New Notes, together with the Initial Notes, are treated as a single class for all purposes under the Indenture. The New Notes are of the same class and series as, and otherwise identical to, the Initial Notes other than with respect to the date of issuance and issue price. The Notes are secured by a first-priority security interest in substantially all the assets of TransDigm, TD Group, TD UK and each other guarantor on an equal and ratable basis with any other existing and future senior secured debt, including indebtedness under TransDigm’s senior secured credit facilities and 8.00% Senior Secured Notes due 2025 (the “2025 Secured Notes”).
The Notes bear interest at the rate of 6.25% per annum, which accrues from March 15, 2020 and is payable in arrears on March 15 and September 15 of each year, commencing on September 15, 2020. The Notes mature on March 15, 2026, unless earlier redeemed or repurchased, and are subject to the terms and conditions set forth in the Indenture.
TransDigm may redeem some or all of the Notes at the redemption prices and on the terms specified in the Indenture. If 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 TransDigm must offer to repurchase the Notes on the terms set forth in the Indenture.
The Notes are senior secured obligations of TransDigm and rank equally in right of payment with all of TransDigm’s existing and future senior secured debt, including indebtedness under TransDigm’s existing senior secured credit facilities and 2025 Secured Notes, and will be senior in right of payment to all of TransDigm’s existing and future senior subordinated debt, including TransDigm’s and TD UK’s outstanding senior subordinated notes. The Notes are guaranteed on a senior secured basis by TD Group, TD UK and TransDigm’s wholly-owned US subsidiaries named in the Indenture. The guarantees of the Notes rank equally in right of payment with all of TransDigm’s existing and future senior secured debt and will be senior in right of payment to all of TransDigm’s existing and future senior subordinated debt. The Notes are structurally subordinated to all of the liabilities of TransDigm’s non-guarantor subsidiaries.
The Indenture contains certain covenants that, among other things, limit TransDigm’s ability, and the ability of certain of its subsidiaries, to incur or guarantee additional indebtedness or issue preferred stock, pay distributions on, redeem or repurchase capital stock or redeem or repurchase subordinated debt, make certain investments, engage in certain transactions with affiliates, consummate certain assets sales, effect a consolidation or merger, or sell, transfer, lease or otherwise dispose of all or substantially all assets, incur or suffer to exist liens securing indebtedness and engage in certain business activities. 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 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.
The above summary of the Indenture is qualified in its entirety by reference to the Base Indenture, which is attached hereto as Exhibit 4.1, and the Supplemental Indenture, which is attached hereto as Exhibit 4.3, each of which is incorporated herein by reference.
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Item 2.03.
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Financial Statements and Exhibits.
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The information set forth in Item 1.01 is incorporated herein by reference into this Item 2.03.