Triumph Group, Inc. (TGI) recently amended its existing revolving credit agreement to increase the size, modify the fee structure and extend the maturity to five years.
This amendment will increase the company’s existing secured revolving credit facility to $850 from $535 million with a $50 million accordion feature. The term of the credit facility was extended to April 5, 2016.
An accordion is an option which allows the borrower to increase the principal under the credit agreement. The interest, maturity and other terms applicable to the increased commitment will be identical to those applicable to the existing credit facility to which the increase relates.
Companies typically purchase an accordion feature in anticipation of the need for more capital for possible expansion opportunities.
Triumph Group intends to use the facility to immediately retire its $350 million Term Loan B and for working capital purposes, internal growth initiatives, funding of future acquisitions and other general corporate purposes.
On May 10, 2010, Triumph Group entered into this credit facility with the completion of the acquisition of Vought. According to this credit facility, Triump Group could borrow, repay and re-borrow revolving credit loans for a principal amount of $535 million.
Recently, Triumph has been benefiting from acquisitions and organic growth, and the Vought acquisition has been highly accretive to earnings.
On June 16, 2010, Triump Group completed the acquisition of Vought Aircraft Industries, Inc. from The Carlyle Group. The acquired business is operating as Triumph Aerostructures-Vought Commercial Division and Triumph Aerostructures-Vought Integrated Programs Division.
We are optimistic about the company’s acquisition strategy, particularly the Vought acquisition. Total synergies from the acquisition are expected to be $18 million and are expected to add approximately $1.10 per share to earnings in fiscal 2011.
TRIUMPH GRP INC (TGI): Free Stock Analysis Report
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