Recently TransDigm Group Incorporated (TDG) announced an offering of guaranteed senior notes worth $500 million of principal amount in aggregate due 2021. The notes will be sold through private placement among potential buyers.
The notes will be subordinated to the company’s existing senior secured credit facilities. TransDigm will use the proceeds from the debt offering to finance its dividend to common stock holders totaling $1 billion to $1.8 billion, which will further be backed by an additional term loan of $700 million and cash on hand. The proceeds will also be utilized for all the related transactions costs and general administrative expenses.
The company has not yet disclosed the interest on the notes. The relevant rates, prices and terms of the offer will be decided later on. The issue being a private placement will not attract registration requirements as per the Securities Act.
With a strong free cash flow and meticulous capital structure, TransDigm seems to be utilizing its resources for inorganic growth, which are helping it boost its core operations. The company’s financial performance continues to reflect its proven operating strategy as one that consistently creates real intrinsic value for shareholders.
In first quarter 2013, TransDigm had cash and cash equivalents of $554.4 million with long-term debt of $4.3 billion and shareowners’ equity of $598.8 million compared with $440.5 million, $3.6 billion and $1.2 billion, respectively in the year-ago period.
TransDigm designs, produces and supplies highly engineered proprietary aerospace components with significant aftermarket content. TransDigm develops highly customized products to solve specific needs of aircraft operators and manufacturers. It attempts to differentiate itself on the basis of engineering, service and manufacturing capabilities.
TransDigm presently has a Zacks Rank #3 (Hold). Some other companies in the industry worth considering at the moment include Astronics Corporation (ATRO) and Kratos Defense & Security Solutions, Inc. (KTOS), each with a Zacks Rank #1 (Strong Buy), while Alliant Techsystems Inc. (ATK) has Zacks Rank #2 (Buy).
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