DynCorp takes in tenders for 90.7% of 10 3/8% notes by early deadline

New York, May 23 – DynCorp International Inc. received tenders for $412.7 million, or 90.7%, of its $455 million of 10 3/8% senior notes due 2017 by the early deadline in its exchange offer for the notes.

The response is sufficient to reach the threshold to allow DynCorp to amend the note indenture, according to a news release.

DynCorp has already passed the 90% threshold that was a condition to the exchange.

Consequently the company said it expects to complete the transaction three days after the offer expires.

DynCorp announced the exchange offer on May 2 and then on May 17 extended the early deadline to 5 p.m. ET on May 20 from 5 p.m. ET on May 16.

As of the previous early deadline, investors had tendered $406.6 million, or 89.4%, of the notes.

The company is offering to exchange any and all of the outstanding 10 3/8% notes for $45 million of cash and up to $410 million principal amount of newly issued 11 7/8% senior secured second-lien notes due 2020.

The exchange offer and consent solicitation is part of a comprehensive refinancing that also includes an amendment and waiver to the company’s senior secured credit facility.

The new notes will be guaranteed by parent company Delta Tucker Holdings, Inc. and by subsidiaries of DynCorp International that guarantee the existing notes and the company’s senior secured credit facility. They will be secured by a second-priority lien on substantially all of DynCorp International’s and each guarantor’s assets, which secure the senior secured credit facility on a first-priority lien basis.

The total exchange value for each $1,000 principal amount tendered by the early deadline will be a pro rata portion of the $45 million cash amount and a principal amount of new notes equal to $1,000 less the pro rata cash payment.

For each $1,000 principal amount tendered after the early deadline, the company is offering a pro rata portion of the $45 million cash amount and a principal amount of new notes equal to $970 less the pro rata cash payment.

Holders of who tender for exchange will not receive accrued interest on the settlement date. Instead, interest on the new notes will accrue from Jan. 1, which was the last date interest was paid on the existing notes.

The tender offer will continue until 5 p.m. ET on June 10.

The completion of each of the elements of the refinancing is a condition to the exchange offer and vice versa.

In addition, the exchange offer is conditioned on tenders for at least $409.5 million, or 90%, of the 10 3/8% notes.

Consent solicitation

DynCorp International is soliciting consents to amend the notes to eliminate substantially all of the restrictive covenants and some events of default.

Holder who tender notes for exchange by the early deadline must also deliver consents to the proposed amendments, the company previously noted.

Consents are needed from the holders of at least a majority of the 10 3/8% notes.

On April 30, holders of $313.5 million principal amount, or 69%, of the 10 3/8% notes entered into a support agreement to tender their notes and deliver consents.

Credit facility waiver

As part of the refinancing, the company entered into an amendment and waiver to its senior secured credit facility on April 30.

The required lenders waived Delta Tucker’s, DynCorp International’s and their subsidiaries’ requirement to comply with the covenant that the company’s annual financial statements include a report from its independent registered public accounting firm without a qualification as to the company’s ability to continue as a going concern until the earlier of the effectiveness of the amendment and June 30.

If the refinancing transactions are completed, the waiver will become permanent for the annual financial statements for the fiscal year ended Dec. 31.

Once the exchange offer is completed, the provisions of the amended credit facility will become operative, including the following:

• The maturity of the revolving credit facility will be extended to July 7, 2019 from July 7, 2016, and the commitments of each lender that consented to the extension will be reduced by 20%;

• A new term loan facility due July 7, 2020 will be issued to refinance the existing term loan facility, in the amount of $207.3 million;

• Some funds will convert their commitment under the extended revolver into a new term loan under the new term loan facility with a principal amount of about $11 million upon the payment of about $10.2 million of cash to DynCorp International; and

• Up to $15 million of incremental revolving facilities will be provided by and at the discretion of some non-debt fund affiliates that are controlled by Cerberus Capital Management, LP, which will rank pari passu with and be on the same terms as the extended revolver.

In addition, DynCorp International received a commitment letter on April 30 from an affiliate of Cerberus for $30 million of third-lien secured loans. The loans are subject to the completion of the exchange offer. The proceeds will be used to fund the company’s global advisory group for a two-year period.

The information and exchange agent for the exchange offer is D.F. King & Co., Inc. (866 796-7182, 212 269-5550 or dyncorpintl@dfking.com).

DynCorp is a McLean, Va.-based provider of aviation, logistics, training, intelligence and operational solutions to commercial, government and military customers.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.