Moody’s assigns Ba2 to TransDigm loan

Moody's Investors Service said it assigned a Ba2 rating to TransDigm Inc.’s new $1.2 billion senior secured term loan G due 2024.

All other ratings, including the B1 corporate family rating, and the stable outlook remain unchanged due to the leverage neutral nature of the transaction.

Proceeds from the new term loan are expected to be used to refinance the company's existing $1.2 billion senior secured term loan C due 2020.

Moody’s said the B1 corporate family rating considers TransDigm's considerable tolerance for financial risk, a highly leveraged balance sheet and the company's private equity-like business model that prioritizes shareholder returns over creditors.

“During 2016, TransDigm incurred a substantial amount of indebtedness – well beyond the bounds of internally generated cash flow – to fund a large-sized special dividend to shareholders and to finance the company's aggressive acquisition strategy,” Moody’s said in a news release.

This resulted in very high financial leverage with September 2016 Moody's adjusted debt-to-EBITDA of about 7.5 times.

During the next few quarters, the agency said it expects TransDigm to delever to more sustainable levels through continued earnings growth and any near-term leveraging transaction would likely result in downward rating pressure.

© 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.