Kratos amends loan, waiving impact of class action lawsuit settlements

By Sara Rosenberg

New York, April 2 - Kratos Defense & Security Solutions Inc. amended its credit facility, waiving the impact of the legal settlement of the 2004 and 2007 shareholder class action lawsuits of $4.9 million on financial covenants as of Dec. 31 and the affected future periods, according to an 8-K filed with the Securities and Exchange Commission Wednesday.

The amendment also increased the Libor floor to 4.25%.

In addition, the company is now required to set aside in a restricted account about 50% of the proceeds of the recovery from the theft of stock options by its former stock option administrator, or $1.7 million, to fund the settlement amounts.

The lenders have also reserved the right to require the company to use the entire amount of the $3.4 million in proceeds received from the theft of stock options to permanently pay down debt. This right can be exercised no earlier than 60 days from March 27 and expires upon the company's compliance with financial covenants for the four consecutive quarters commencing after Jan. 1, 2008.

KeyBank is the administrative agent on the deal.

The amendment was completed on March 27.

Kratos is a San Diego-based provider of engineering, IT services and warfighter services.

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