DeCrane amends loan, allowing for asset sale, relaxing covenants, reducing revolver

By Sara Rosenberg

New York, April 15 - DeCrane Aircraft Holdings amended its senior credit facility to allow for the sale of its Specialty Avionics Group with the provision that the approximate $132 million of net proceeds from the sale will be used to repay borrowings under the senior credit facility.

Furthermore, the amendment relaxes financial covenants for 2003 and beyond, decreases the maximum permitted revolver borrowings by $10 million to $40 million, increases the prime rate and Libor interest margins by 150 basis points and permits the issuance of additional indebtedness and the repurchase of a portion of the 12% senior subordinated notes, according to a filing with the Securities and Exchange Commission.

If the sale is not completed by June 30, an event of default will occur under the amended credit agreement and the lenders may cease to provide additional borrowings and may accelerate repayment of all outstanding borrowings, according to the filing. If a default occurs under the credit agreement, then it would trigger an event of default under the company's other debt agreements.

"In such event, we would require alternate sources of capital, which we may not be able to obtain. As a result, there are doubts about our ability to continue as a going concern," the filing added.

DeCrane is an El Segundo, Calif. supplier of products and services, focusing on the corporate, VIP and head-of-state aircraft market.

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