Fitch lowers TransDigm subordinated notes to CCC+

Fitch Ratings said it affirmed the issuer default rating of TransDigm Group, Inc. at B, along with the issuer default rating at B of its indirect subsidiary, TransDigm Inc.

The affirmations follow the issuance of about $3.4 billion in debt.

Fitch also said it affirmed the ratings on TransDigm's senior secured credit facilities at BB with a recovery rating of RR1 and downgraded the rating on its senior subordinated notes to CCC+ with a recovery rating of RR6 from B- with a recover rating of RR5.

The outlook is negative.

The newly issued debt consists of an $825 million tranche of term loans under TransDigm's senior secured credit facilities, proceeds of borrowings under the $200 million trade receivables securitization facility and $2.35 billion aggregate principal amount of senior subordinated notes due in 2022 and 2024.

The proceeds will be used primarily to repurchase any or all of the outstanding $1.6 billion senior subordinated notes due in 2018 and to fund a cash dividend in the range of $900 million to $1.7 billion, Fitch said.

While the agency said it expects TransDigm Group's projected metrics will still be consistent with the current B rating, the level of support for this rating is reduced by the new debt.

The agency also said it has expectations of lower recovery prospects for this class of the securities in a theoretical financial distress scenario.

The company benefits from high profit margins and low capital expenditures, diversification of its portfolio of products and a large percentage of sales from a relatively stable aftermarket business, Fitch added.

© 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.