Kratos Defense amends credit facility to ease financial covenants

By Marisa Wong

Madison, Wis., June 1 – Kratos Defense & Security Solutions, Inc. entered into a third amendment on May 31 to its existing credit and security agreement dated May 14, 2014 with SunTrust Bank as administrative agent, according to an 8-K filing with the Securities and Exchange Commission.

Among other things, the third amendment provides a permanent reduction in some financial covenants, including the minimum fixed-charge coverage ratio, and allows the company to complete a sale of the U.S. and U.K. operations of its electronic products division to Ultra Electronics Holdings plc.

The minimum fixed-charge coverage ratio will not be measured for the quarterly reporting period ending on or about June 30 and will be set at 1.05 to 1.00 if the company’s outstanding borrowings are greater than 0% but less than 15%, at 1.10 to 1.00 if the outstanding borrowings are equal to or greater than 15% but less than 25% and at 1.15 to 1.00 for all other instances.

Outstanding borrowings for purposes of computing the applicable minimum fixed-charge coverage ratio exclude any letter-of-credit exposure outstanding of $17 million.

Kratos is a national security solutions provider based in San Diego.

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