May 4, 2016, 6:26am EDT Updated May 4, 2016, 12:25pm EDT
DynCorp International announced a debt restructuring deal Monday that would keep the company from default.
The McLean-based government contractor said the deal would extend the maturity dates of $187.3 million in bank loans and $455 million in bonds that were fast approaching.
DynCorp International has launched a deal to restructure its debt, just as it was approaching a big July payment.
DynCorp International has launched a deal to restructure its debt, just as it was… more
As a part of a $1.6 billion buyout deal by New York-based Cerberus Capital Management in 2010, DynCorp’s balance sheet took on a lot of debt at about the same time its revenue went into a tailspin as contracts related to the war in Afghanistan wound down.
The bank loan would be refinanced with a new $207.3 million loan due July 7, 2020. DynCorp would also pay $45 million in cash to bondholders and issue another $410 million in bonds at an interest rate of 11.875 percent — a 1.5 percentage point increase from the old notes — set to mature on Nov. 30, 2020. Those bonds would mature on July 1, 2017, absent a restructuring.
Bondholders will also be bumped up in the capital structure. The old notes were unsecured, while these new notes would give them a claim to DynCorp assets after the banks are paid off in the event of a bankruptcy.
As of April 30, the company said, 69 percent of bondholders holding about $313.5 million entered into the agreement where they would receive the cash and new bonds in proportion with their current holdings. The company said it would need 90 percent of bondholders to agree to the deal before it could proceed.
“The launch of these refinancing transactions is great news, and importantly, would extend the maturity of our debt instruments providing stability, time and flexibility to execute our mission,” the company said in an emailed statement. “We look forward to announcing the successful completion of this refinancing process in the near future.”
DynCorp will also have a $144.8 million line of credit extended to July 7, 2019, and reduce the value it can draw upon by 20 percent. That was originally set to expire on July 7 along with the bank loans.
James Bach covers federal contracting.