Allison to use revolver draw for $363 million stock repurchase

By Devika Patel

Knoxville, Tenn., Feb. 7 – Allison Transmission Holdings, Inc. intends to fund a repurchase of all of Value Add Capital’s common stockholdings in the company with a drawdown on its revolver, which will be repaid by the end of the year, and cash on hand.

ValueAct Capital owns 6.5% of Allison’s outstanding shares, which the company will buy back at $34.50 per share, for a total of about $363 million.

“Allison intends to fund the stock repurchase with cash on hand and borrowing under its revolving credit facility,” chairman and chief executive officer Lawrence E. Dewey said on the company’s fourth quarter earnings conference call on Tuesday.

The company will draw on the revolver, but expects to have the debt repaid by the end of the year.

“I would expect that we’ll draw down the cash on hand by probably more than half and the balance would come out of the revolver, and the revolver we would expect to have repaid before the end of the year,” president, chief financial officer and treasurer David S. Graziosi said on the call.

The company reported adjusted free cash flow of $146 million in the quarter, compared to $147 million of free cash flow for the same period in 2015. It ended the year with net leverage of 3.08x, $205 million of cash and $432 million of revolver availability.

Adjusted EBITDA for the quarter was $158 million, compared to $170 million for the same period in 2015.

Allison Transmission is an Indianapolis-based automatic transmission company.

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