Spirit AeroSystems amends for covenant relief, decreases revolver

By Sarah Lizee

Olympia, Wash., Aug. 3 – Spirit AeroSystems Holdings, Inc., Spirit AeroSystems, Inc. and Spirit AeroSystems North Carolina, Inc. amended their credit agreement with Bank of America, NA as administrative agent on Friday to obtain covenant relief relating to expected breaches of the first-lien leverage and interest coverage ratios, according to an 8-K filing with the Securities and Exchange Commission.

As a condition to the covenant relief, the company reduced the size of the revolver by $300 million to $500 million and used $100 million of cash on hand to prepay the $206 million term loan A and $250 million delayed-draw term loan on a pro rata basis.

The ratio of first-lien senior secured debt to consolidated EBITDA over the last 12 months will not be tested in the fourth fiscal quarter of 2020 and the first fiscal quarter of 2021 and will not, as of the end of the applicable fiscal quarter, be more than 6.5x with respect to the third fiscal quarter of 2020, 4.5x with respect to the second fiscal quarter of 2021, 3.5x with respect to the third fiscal quarter of 2021, and 3x after that through the fourth fiscal quarter of 2022.

The interest coverage ratio will not be tested in the fourth fiscal quarter of 2020 and the first fiscal quarter of 2021 and will not, as of the end of the applicable fiscal quarter, be less than 1.25x with respect to the third fiscal quarter of 2020, 1.15x with respect to the second fiscal quarter of 2021, 1.35x with respect to the third fiscal quarter of 2021, 1.5x with respect to the fourth fiscal quarter of 2021, 2x with respect to the first fiscal quarter of 2022, 2.75x with respect to the second fiscal quarter of 2022, 3.25x with respect to the third fiscal quarter of 2022, 3.75x with respect to the fourth fiscal quarter of 2022 and 4x after that.

The ratio of debt to consolidated EBIDTA over the last 12 months will not be tested until the second fiscal quarter of 2022 and will not, as of the end of the applicable fiscal quarter, be greater than 6x 6 with respect to the second fiscal quarter of 2022, 5.5x with respect to the third fiscal quarter of 2022, 4.5x with respect to the fourth fiscal quarter of 2022 and 3.5x after that.

As of the end of each fiscal month, until the end of the ninth fiscal month of 2022, the company will have minimum liquidity of not less than $750 million.

The amendment added a new event of default that would be triggered if the company’s senior floating-rate notes remain outstanding and the term loan and the delayed-draw term loan have not been repaid by the date that is 91 calendar days prior to the maturity date of the floating-rate notes.

Each loan continues to mature on July 12, 2023. Interest is Libor plus 337.5 basis points to 487.5 bps based on credit ratings.

Spirit AeroSystems is a Wichita, Kan.-based maker of commercial and military airplane components, including fuselages, propulsion systems and wings.

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