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TransDigm Extends Offer Date

Zacks Equity Research

TransDigm Group Incorporated (TDG) extended the expiration dates for the exchange offer that allows up to $500 million of new Senior Subordinated Notes registered under the Securities Act of 1933 to be exchanged with the unregistered ‘old notes,’ both due in 2021.

The exchange offer was formerly set to expire on Sep 26, 2013.  The approximate value of the tenders received as of this date was $499 million, or about 99.8% of the aggregate principal amount. Following the extension, the exchange offer is now scheduled to expire on Oct 1, 2013. The other terms of the exchange offer remained same as those in the initial prospectus that was dated on Aug 27, 2013.

In Jun 2013, TransDigm had announced the offering of guaranteed senior notes worth $500 million of principal amount in aggregate due 2021. The notes were to be sold through private placement among potential buyers.

TransDigm was to use the proceeds from the debt offering to finance its dividend to common stock holders totaling $1 billion to $1.8 billion, along with an additional term loan of $700 million and cash on hand. The proceeds were also to be utilized for all the related transactions costs and general administrative expenses.

TransDigm designs, produces and supplies highly engineered proprietary aerospace components with significant aftermarket content. It attempts to differentiate itself on the basis of engineering, service and manufacturing capabilities. With a strong free cash flow and meticulous capital structure, TransDigm seems to be utilizing its resources for inorganic growth, which are helping it to 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.

TransDigm currently carries a Zacks Rank #4 (Sell). Better-placed stocks in the sector that are worth a look include Electronics System Technology Inc (ELST), Alliant Techsystems (ATK) and Rolls Royce (RYCEY). While Electronics System and Alliant carry a Zacks Rank #1 (Strong Buy), Rolls Royce has a Zacks Rank #2 (Buy).

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