Cubic Strengthens Financial Flexibility with Restructuring of Debt and Revolver Credit Increase
March 30 2020 - 6:00AM
Business Wire
Cubic Corporation (NYSE:CUB) today announced it entered into an
amended and restated credit agreement, providing Cubic with a new
$450 million unsecured term loan and upsizing Cubic’s existing
unsecured revolving credit facility from $800 million to $850
million. The maturity date of the revolving credit facility was
extended to March 27, 2025 and the maturity date of the new term
loan was established as of March 27, 2025. The term loan and any
revolving credit facility loans will bear interest at a rate equal
to either LIBOR plus a margin of 1.00 percent to 2.00 percent or an
Alternate Base Rate plus a margin of 0.00 to 1.00 percent,
consistent with the existing revolving credit facility.
Proceeds from the new term loan will be used for the early
repayment of Cubic’s outstanding private placement and general
corporate purposes. Under the new credit agreement, Cubic will be
subject to more favorable terms and less restrictive covenants than
those of the private placements. The new credit agreement includes
a financial covenant providing that Cubic maintains a net leverage
ratio of no greater than 4.0x, subject to being increased to 4.75x
for a period of 12 months in connection with certain permitted
acquisitions.
“We are committed to the health and safety of our employees as
well as supporting our customers during this unprecedented and
rapidly changing environment,” said Bradley H. Feldmann, chairman,
president and chief executive officer of Cubic Corporation. “This
transaction underscores the lending community’s confidence in our
strategy and the strength of our mission critical offerings.”
“We are very pleased with the successful execution of our new
term loan as well as the upsizing and extension of our revolving
credit facility. This transaction further strengthens Cubic’s
financial flexibility through favorable pricing and covenants, an
improved maturity profile and 30% additional capacity,” said
Anshooman Aga, executive vice president and chief financial officer
of Cubic Corporation. “We remain focused on lowering our net
leverage ratio to our target of less than 3.0x.”
This transaction extends the average life of Cubic’s debt by
approximately 1.4 years and decreases principal amortization over
the next 24 months by approximately $49 million. Cubic will hedge
the term loan by swapping the LIBOR exposure to a fixed rate over
the five-year period to mitigate the risk of rising interest
rates.
JPMorgan Chase Bank, N.A. will serve as the Administrative Agent
for the credit facilities. JPMorgan Chase Bank, N.A., Bank of the
West, MUFG Union Bank, N.A., Truist Bank and Wells Fargo Bank
National Association acted as Joint Lead Bookrunners and Joint Lead
Arrangers for the credit facilities.
A supplemental slide is available on the Investor Relations
section of Cubic's website at
https://www.cubic.com/investor-relations/events-presentations. The
company’s response to COVID-19 can also be found on Cubic’s website
at https://www.cubic.com/COVID-19.
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version on businesswire.com: https://www.businesswire.com/news/home/20200330005149/en/
Investor Contact Kirsten
Nielsen Investor Relations Cubic Corporation PH +1 212-331-9760
Kirsten.Nielsen@cubic.com
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