Kratos to use free cash flow for debt repayment, according to CEO

By Lisa Kerner

Charlotte, N.C., May 20 - Kratos Defense & Security Solutions, Inc.'s recent refinancing was "very important" and "very significant" to the company, especially given that it is not on the acquisition side of the M&A game anymore, said president and chief executive officer Eric DeMarco.

The CEO made his comments during a presentation on Tuesday at the 15th Annual B. Riley & Co. Investor Conference in Santa Monica, Calif.

"We reduced our interest rate on our notes from 10% to 7%, so that 300-basis-point improvement on $625 (million) is approximately $19 million a year in free cash flow we're going to increase on an annual basis going forth," DeMarco said.

"Our plan is to take that cash flow and pay down the debt, which is a nice feature of these new notes, so that we can actually pay some of it down and not just net it down on the balance sheet."

The San Diego-based high-tech defense contractor announced previously it would use the proceeds to redeem its 10% secured notes due 2017.

At March 30, Kratos had about $58 million of cash.

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