| Item 1.01. | Entry into a Material Definitive Agreement. |
Issuance of Notes
On August 18, 2023, TransDigm Inc. (“TransDigm”), a wholly-owned subsidiary of TransDigm Group Incorporated (“TransDigm Group”), completed the previously announced offering of $1,450 million in aggregate principal amount of 6.875% Senior Secured Notes due 2030 (the “Notes”) at an issue price of 100% of the principal amount thereof.
TransDigm intends to use the net proceeds of the offering of the Notes, together with cash on hand, to redeem all of its outstanding 6.375% Senior Subordinated Notes due 2026 (the “2026 Subordinated Notes”) and all of the outstanding 6.875% Senior Subordinated Notes due 2026 (the “UK Notes”) of TransDigm UK Holdings plc and to pay related premiums, fees and expenses.
The Notes and related guarantees 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 Notes were issued pursuant to an indenture, dated as of August 18, 2023 (the “Indenture”), among TransDigm, as issuer, TransDigm Group and the 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 6.875% per annum, which accrues from August 18, 2023 and is payable in arrears on June 15 and December 15 of each year, commencing on December 15, 2023. The Notes mature on December 15, 2030, 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. As of the issue date, the Notes are guaranteed, on a senior secured basis, by TransDigm Group and each of TransDigm’s direct and indirect restricted subsidiaries that is a borrower or guarantor under TransDigm’s senior secured credit facilities. From and after the issue date, the Notes will be guaranteed, with certain exceptions, on a senior secured basis by TransDigm Group and each of the TransDigm’s direct and indirect restricted subsidiaries that is a borrower or guarantor under TransDigm’s senior secured credit facilities or that issues or guarantees any capital markets indebtedness of TransDigm or any of the guarantors in an aggregate principal amount of at least $200 million. 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 Notes to be due and payable immediately.
