Moody’s rates TransDigm loans, notes Ba3

Moody's Investors Service said it assigned Ba3 ratings to TransDigm Inc.'s new backed senior secured first-lien notes and a Ba3 rating and its new backed senior secured first-lien term loan.

All other ratings, including the B1 corporate family rating, B1-PD probability of default rating, Ba3 backed senior secured ratings, and B3 backed senior subordinated ratings are unchanged., the agency said.

The proceeds from the new notes will be used for general corporate purposes as well as to fund the $1.385 billion acquisition of the electron device business of Communications & Power Industries, a portfolio company of TJC, LP. TransDigm plans to close the CPI acquisition in the third fiscal quarter of 2024 (fiscal year ending September).

“Moody's believes that an immediate use of the proceeds and current cash reserves will be to fund a $2 billion dividend to be paid on November 27, 2023. As the new notes and term loan raises already-escalated debt levels by approximately 10% at a time when the company will undertake a large dividend to shareholders, Moody's views these transactions to be credit negative,” the agency said in a press release.

The outlook remains stable.

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