Astronics (ATRO) Successfully Refinances Debt

By Tamara Parker • Friday, July 12 15:16 • Permanent Link

Astronics Corporation (NASDAQ: ATRO) has successfully refinanced its debt, resulting in improved liquidity, lower cash costs, and greater financial flexibility. The company has expanded its revolving line of credit from $115 million to a maximum of $200 million, with an interest rate of SOFR plus 2.5% to 3.0%. At the time of closing, Astronics had $128 million drawn on the facility. The new $55 million term loan features an interest rate of SOFR plus 5.5% to 6.75%, with an estimated annual cash amortization of approximately $550,000, down from the previous rate of approximately $9.0 million.

The refinancing is expected to result in significant cash savings of approximately $10.5 million annually, including an approximate $2.0 million reduction in annual interest expense. The initial weighted average interest rate at current SOFR levels is estimated to be 9.6%, down from the previous blended rate of 11.0%. Additionally, the new package offers a significant improvement in liquidity over the previous structure, with available liquidity of approximately $50 million initially.

The restructured lending agreements also feature less restrictive financial covenants, including a minimum fixed charge coverage ratio of 1.1 to 1.0 and minimum liquidity of the greater of $15 million or 10% of the borrowing base. Both the expanded revolver and the new term loan mature on July 11, 2027.

The new term loan and borrowings on the expanded revolver were used to repay the $80.3 million outstanding on the previous term loan, the 4.0% call premium of approximately $3.2 million, and accrued and unpaid interest and fees. It's estimated that third quarter 2024 expenses will include refinancing-related fees, the call premium on the previous term loan, and the write-off of deferred financing costs related to the previous financing, totaling approximately $8.0 million.

As a result of these announcements, the company's shares have moved -1.7% on the market, and are now trading at a price of $20.94. Check out the company's full 8-K submission here.

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