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Engility aims for 3x to 4x leverage, pays down $100 million per year
By Devika Patel
Knoxville, Tenn., June 6 – Engility Holdings, Inc. plans to keep paying down its debt at a rate of $100 million per year until it reaches its target leverage range of between 3x and 4x, which management expects will be achieved over the next few years.
“We’re able to generate a significant amount of cash and our first priority is really to pay down debt,” senior vice president and chief financial officer Wayne Rehberger said at the Morgan Stanley Leveraged Finance Conference in New Orleans on Wednesday.
“We are leveraged higher than some of our competitors.
“We want to get down to be between 3x and 4x on our debt to EBITDA ratio and we think we can do that over the next few years,” he said.
The company has repriced its bank debt four times in the last 18 months.
“We have been very successful in refinancing our debt and repricing our term loans,” Rehberger said.
“We’ve had four instances over the course of the last year and a half.
“We refinanced our debt back in August of 2016 and then had three reprices since that time.
“Cumulative impact is an interest rate savings of $33 million annually based on the current debt load,” he said.
Engility had enough cash flow in the first quarter to pay down $20 million of debt.
“We made debt payments of $20 million, $20 million in the first quarter,”
“The first quarter is a very slow quarter for us from a cash flow perspective, so I was very pleased that we had the ability to pay down $20 million in the first quarter.
The company also repriced some bank debt.
“We did a reprice of our B-1 and B-2 term loans, lowered the interest rate and also extended the terms of $75 million we moved from our B-1 to B-2,”
Going forward, more deleveraging is planned.
“We continue to de-lever, paying down $100 million a year,”
Engility is a Chantilly, Va.-based provider of integrated services for the U.S. government.
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