Alion noteholders OK revolver increase, new refinancing support terms

By Susanna Moon

Chicago, Feb. 18 - Alion Science and Technology Corp. amended its refinancing support agreement on Feb. 13 with some noteholders to allow it to lift the maximum credit available under its revolving facility to $65 million from $45 million upon lender approval.

The noteholders and their respective affiliates, including some private funds and accounts they manage, hold about 66.7% of the principal amount of Alion's outstanding 10¼% senior notes due 2015, according to an 8-K filed Tuesday with the Securities and Exchange Commission.

As previously announced, the company entered into a refinancing support agreement Dec. 24 with ASOF II Investments, LLC and Phoenix Investment Adviser LLC.

The amendment also

• Extends the date by which the refinancing transactions contemplated by the refinancing support agreement must be completed to April 28 from March 21;

• Deletes the supporting noteholders' right to terminate the refinancing support agreement with respect to the condition that the tender/exchange offer be started within 50 days after execution of the refinancing support agreement;

• Increases the amount of upfront fees, which may be in the form of original issue discount, payable to the lenders under the new second-lien term facility by 50 basis points;

• Adjusts the anti-dilution trigger for the new warrants based on sales below the current market value of the company's common stock and adds an anti-dilution trigger in the event certain liquidity events were to occur on or before March 15, 2017;

• Changes the date on which the series A holder may instruct the company to undertake a sale process from the third anniversary of the closing to Sept. 30, 2016 and adjusts the call premium on the third-lien notes commensurately; and

• Changes the voting mechanism by which new warrant holders may waive or amend certain restrictions to be set forth in the company's certificate of designations.

As payment for the agreement to extend its commitment to fund the new second-lien term facility through the outside date, Alion agreed to pay a $750,000 commitment extension fee to ASOF.

Alion, a research and development company whose primary customer is the U.S. government, is based in McLean, Va.

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