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VSE gets $90 million term loan, reduces incremental capacity by $75 million
By Mary-Katherine Stinson
Lexington, Ky., July 7 – VSE Corp. and most of its wholly owned subsidiaries on July 3 entered a fifth amendment to its fourth amended and restated business loan and security agreement, according to an 8-K filing with the Securities and Exchange Commission.
The amendment provides for a new term loan totaling $90 million which matures on the same date as the company’s existing term loans and reduces the company’s capacity to incur incremental revolving or term loan credit facilities to $25 million from $100 million.
The quarterly amortization payments for the new term loan were set at $2.25 million, beginning the fiscal quarter ending Sept. 30.
Meanwhile, the maximum total funded debt to EBITDA ratio was increased to 5x from 4.5x. The ratio will decrease to 3.75x by Sept. 30, 2025 and after. A tier was added to the top of the pricing grid if the total funded debt to EBITDA ratio exceeds 4.5x.
Finally, the agreement was amended to permit the Desser acquisition and the Loar sale.
Citizens Bank, NA is the administrative agent of the credit agreement, which was first entered on Jan. 5, 2018.
On July 3, VSE closed its previously announced $124 million acquisition of Desser Holding Co. LLC. Concurrent with the Desser purchase, VSE sold Desser’s proprietary solutions businesses to the Loar Group Inc. for a total cash consideration of $30 million.
The total net cash outlay for the assets VSE acquired is $94 million, $90 million of which was funded from the term loan proceeds and $4 million drawn down from VSE’s existing credit facility.
VSE is a diversified logistics and services company based in Alexandria, Va.
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