Defense contractor Alliant Techsystems Inc. (ATK) continues to prudently manage its balance sheet by announcing plans to further enhance its liquidity position. Yesterday, Alliant Techsystems put forth plans to refinance its existing senior credit facilities.
Alliant is in talks with a group of lenders to replace its existing credit facilities to strengthen its liquidity. Currently, the company has $500 million of revolving credit facility and $257.8 million in term loans. The company expects to replace these facilities with a new five-year senior credit facility of up to $1.0 billion. The new facility will comprise a $600 million revolving credit facility and a $400 million term loan.
We believe the proposed $1.0 billion refinancing will provide the company with ample finances to fund future growth and meet its debt obligations as well as its capital expenditures.
In another release, the company announced plans to sell $300 million worth of senior notes maturing in 2020. Alliant intends to use roughly $280 million of the net $300 million proceeds to redeem all of its outstanding 2.75% convertible notes due 2024. Remaining proceeds will be used for general corporate purposes.
As of the end of the first quarter of fiscal 2011, Alliant’s cash and cash equivalents were $91.9 million and long-term debt was $1.4 billion. During the quarter, the company spent nearly $35 million towards capital expenditure.
Going forward, the company expects to generate free cash flows in the range of $275 – $300 million, with capital expenditures of roughly $120 million.
Alliant Techsystems is a premier aerospace and defense company with more than 18,000 employees in 22 states, Puerto Rico and internationally, and revenues of approximately $4.8 billion. The company supplies aerospace and defense products to the U.S. government agencies, and its prime contractors and sub-contractors. The company also supplies ammunition and related accessories to law enforcement agencies and commercial customers.
Currently, we have a short-term Zacks #3 Rank (Hold) on the stock. We also have a long-term Neutral recommendation on Alliant.
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