| Item 1.01. | Entry into a Material Definitive Agreement. |
Issuance of Notes
On March 9, 2023, TransDigm Inc. (“TransDigm”), a wholly-owned subsidiary of TransDigm Group Incorporated (“TransDigm Group”), completed the previously announced offering of an additional $1,100 million in aggregate principal amount of 6.75% Senior Secured Notes due 2028 (the “New Notes”) at an issue price of 99% of the principal amount plus accrued interest. TransDigm intends to use the net proceeds from the offering of the New Notes to redeem all of its outstanding 8.00% senior secured notes due 2025, the aggregate principal amount of which is also $1,100 million. As a result of this transaction, TransDigm’s nearest term loan or note maturity will now be March 2026.
The New Notes are an additional issuance of the $1,000 million aggregate principal amount of 6.75% Senior Secured Notes due 2028 that were previously issued on February 24, 2023 (the “Initial Notes” and, collectively with the New Notes, the “Notes”). The New Notes were issued in a private offering to persons reasonably believed to be qualified institutional buyers in accordance with Rule 144A under the Securities Act of 1933 (the “Securities Act”) and to non-U.S. persons outside the United States under Regulation S under the Securities Act . The New Notes are of the same class and series as, and otherwise identical to, the Initial Notes, other than with respect to the date of issuance and issue price.
The New Notes were issued pursuant to an indenture, dated as of February 24, 2023 (the “Base Indenture”), as supplemented by the first supplemental indenture, dated as of March 9, 2023 (the “Supplemental Indenture”; the Base Indenture as supplemented by the Supplemental Indenture, the “Indenture”), among TransDigm, as issuer, TransDigm Group, TransDigm UK Holdings plc (“TransDigm UK”) and the other subsidiaries of TransDigm party thereto, as guarantors, The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”) and US collateral agent, and The Bank of New York Mellon, as UK collateral agent.
The Notes bear interest at the rate of 6.75% per annum, which accrues from February 24, 2023 and is payable in arrears on February 15 and August 15 of each year, commencing on August 15, 2023. The Notes mature on August 15, 2028, 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 TransDigm’s senior secured obligations. The Notes are guaranteed on a senior secured 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 Notes and guarantees rank equally in right of payment with all of TransDigm’s and the guarantors’ existing and future senior indebtedness, senior in right of payment to any of TransDigm’s and the guarantors’ existing and future indebtedness that is, by its terms, expressly subordinated in right of payment to the Notes and guarantees, and 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 of the Notes to be due and payable immediately.
