SAN DIEGO, Feb. 22 11, 2022 (GLOBE NEWSWIRE) — Kratos Defense & Security Solutions, Inc. (Nasdaq: KTOS), a leading provider of national security solutions, today announced the refinancing of its $90 million outstanding revolving credit facility. and $300 million 6.5% Senior Secured Notes, with a new $200 million 5-year revolving credit facility and $200 million 5-year Term Loan A (collectively, the “New Credit Facility”). The Company has drawn approximately $200 million under Term Loan A and $100 million under the new revolving credit facility, with a remaining borrowing capacity of $100 million. The mandatory amortization for Term Loan A is 2.5% for each of the first and second years and 5.0% for each of the third, fourth and fifth years, with the outstanding balance due at maturity. Based on current borrowing rates under the new credit facility and the current amount drawn, the Company expects to save approximately $10-13 million annually in cash interest payments. 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 cash equal to 103.25% of the principal amount thereof, plus accrued charges and unpaid interest up to, but not including, the redemption date (the “Redemption Offer”).
Following the refinancing of the Company’s existing 6.5% senior notes and existing revolving credit facility, the Company expects to record one-time charges of approximately $13-15 million over the course of its first fiscal quarter, including the purchase premium of 3.25% and the write-off of deferred financing costs associated with the initial financing transactions.
Deanna Lund, Executive Vice President and Chief Financial Officer of Kratos, said: “The cost of this refinance, including the purchase premium, is expected to be recovered in approximately 12 months, with expected savings of approximately $10-13 million. dollars in cash interest payments per year, based on current interest rates and the amount currently withdrawn. This refinancing allows Kratos to remain internally focused – on executing our strategic plan and to continue to make targeted investments to grow the business organically.
Eric DeMarco, President and CEO of Kratos, said, “Kratos’ mission is to quickly develop and deliver the right products and systems at an affordable cost to our customers, which we believe is a business model. win for all our stakeholders. This successful refinancing by Deanna and her team is an incredibly positive event for the entire Kratos company.
Truist Securities, Inc. was the lead arranger for Kratos’ new credit facility.
About Kratos Defense and Security Solutions
Kratos Defense & Security Solutions, Inc. (NASDAQ: KTOS) develops and markets transformative and affordable technologies, platforms and systems for U.S. national security customers, allies and commercial enterprises. Kratos is changing the way breakthrough technologies for these industries are brought to market quickly through proven business and venture capital approaches, including proactive research and streamlined development processes. At Kratos, affordability is technology, and we specialize in unmanned systems, satellite communications, cybersecurity/warfare, microwave electronics, missile defense, hypersonic systems, training systems and combat and the development of next-generation turbojets and turbofans. For more information, visit www.kratosdefense.com.
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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 new information, future events or otherwise. This press release may contain “forward-looking statements” within the meaning of the federal securities laws, including statements relating to the expected timing, final terms and completion of the tender offer, the expected reduction in charges annual interest payments to be realized by the Company as and when arising from the Redemption Offer and the recently concluded refinancing transaction and similar statements regarding 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 predict or accurately assess, including the risk that Kratos may not be able to repay all of the Senior Secured Notes under the Tender Offer, on time or at all, the risks associated with financial market fluctuations and other risks and uncertainties which are further described. in 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 tender offer transaction will realized, or that the expected annual interest expense savings will be realized as described herein or not at all. Each of these factors could cause actual results to differ materially from the expectations expressed or implied by Kratos in this press release.
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