Kratos to redeem $300 million 6˝% notes due 2025, replace with revolver

By Marisa Wong

Los Angeles, Feb. 10 – Kratos Defense & Security Solutions, Inc. announced it has begun an offer to redeem all of its outstanding 6˝% senior secured notes due 2025 on March 14, according to an 8-K filing with the Securities and Exchange Commission.

The notes will be redeemed at 103.25 plus accrued interest to but excluding the redemption date.

The company is in the process of refinancing its revolving credit facility and intends to replace the senior secured notes through this refinancing process. The notes redemption is subject to the refinancing.

The company currently expects that its refinancing activities will be completed before the redemption date and will provide additional details related to the refinancing transaction once it has been completed.

Deanna Lund, Kratos’ executive vice president and chief financial officer, said in a press release, “The offer to redeem the [notes] and replace these borrowings with traditional bank financing, once successfully completed, is expected to save Kratos approximately $10 to $13 million in cash interest payments annually, based on current interest rates, while also positioning the company to continue to maintain significant cash on its balance sheet to support expected future growth, including potential future large production opportunities in the unmanned systems business.”

Based in San Diego, Kratos specializes in unmanned systems, satellite communications, cybersecurity/warfare, microwave electronics, missile defense, hypersonic systems, training, and combat systems.

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