| Item 1.01. | Entry into a Material Definitive Agreement. |
Indenture
On January 20, 2021, TransDigm Inc. (“TransDigm”), a wholly-owned subsidiary of TransDigm Group Incorporated (“TransDigm Group”), issued $1,200 million in aggregate principal amount of 4.625% Senior Subordinated Notes due 2029 (the “Notes”) at an issue price of 100% of the principal amount thereof in a private offering to qualified institutional buyers in accordance with Rule 144A under the Securities Act of 1933 (the “Securities Act”) and to persons outside the United States under Regulation S under the Securities Act.
The Notes were issued pursuant to an indenture, dated as of January 20, 2021 (the “Indenture”), among TransDigm, as issuer, TransDigm Group, TransDigm UK Holdings plc (“TransDigm UK”) and the other subsidiaries of TransDigm party thereto, as guarantors, and The Bank of New York Mellon Trust Company, N.A., as trustee.
The Notes bear interest at the rate of 4.625% per annum, which accrues from January 20, 2021 and is payable in arrears on January 15 and July 15 of each year, commencing on July 15, 2021. The Notes mature on January 15, 2029, unless earlier redeemed or repurchased, and are subject to the terms and conditions set forth in the Indenture.
TransDigm may redeem some or all of the Notes at the redemption prices and on the terms specified in the Indenture. If TransDigm Group or TransDigm experiences specific kinds of changes in control or TransDigm Group or any of its restricted subsidiaries sells certain of its assets, then TransDigm must offer to repurchase the Notes on the terms set forth in the Indenture.
The Notes are subordinated to all of TransDigm’s existing and future senior debt, rank equally with all of its existing and future senior subordinated debt and rank senior to all of its future debt that is expressly subordinated to the Notes. The Notes are guaranteed on a senior subordinated unsecured basis by TransDigm Group, TransDigm UK and, other than immaterial subsidiaries and certain other exceptions, all of TransDigm’s existing and future U.S. subsidiaries. The guarantees of the Notes are subordinated to all of the guarantors’ existing and future senior debt, rank equally with all of their existing and future senior subordinated debt and rank senior to all of their future debt that is expressly subordinated to the guarantees of the Notes. The Notes are structurally subordinated to all of the liabilities of TransDigm’s non-guarantor subsidiaries.
The Indenture contains certain covenants that, among other things, limit TransDigm’s ability, and the ability of certain of its subsidiaries, to incur or guarantee additional indebtedness or issue preferred stock, pay distributions on, redeem or repurchase capital stock or redeem or repurchase subordinated debt, make certain investments, engage in certain transactions with affiliates, consummate certain assets sales, effect a consolidation or merger, or sell, transfer, lease or otherwise dispose of all or substantially all assets, incur or suffer to exist liens securing indebtedness and engage in certain business activities. The Indenture contains events of default customary for agreements of its type (with customary grace periods, as applicable) and provides that, upon the occurrence of an event of default arising from certain events of bankruptcy or insolvency with respect to TransDigm, all outstanding Notes will become due and payable immediately without further action or notice. If any other type of event of default occurs and is continuing, then the trustee or the holders of at least 25% in principal amount of the then outstanding Notes may declare all Notes to be due and payable immediately.
Registration Rights Agreement
In connection with the issuance of the Notes, TransDigm, TransDigm Group, TransDigm UK, the other subsidiary guarantors party thereto, and Goldman Sachs & Co. LLC and Morgan Stanley & Co. LLC, as representatives for the initial purchasers listed therein, entered into a registration rights agreement relating to the Notes, dated January 20, 2021 (the “Registration Rights Agreement”). Under the Registration Rights Agreement, TransDigm and the guarantors agreed, for the benefit of the holders of the Notes, that they will file with the Securities and Exchange Commission (the “SEC”) within 210 days after the date the Notes were issued, and use their reasonable best efforts to cause to become effective within 300 days after the date the Notes were issued, one or more registration statements (collectively, the “exchange offer registration statement”) relating to an offer to exchange the Notes for an issue of SEC-registered notes with terms identical to the Notes (except that such exchange notes will not be subject to restrictions on transfer or to any increase in annual interest rate as described below).
