Ducommun Incorporated Announces New Credit Facility

Rhea-AI Summary

Ducommun Incorporated (NYSE: DCO) announced a new credit facility comprising a $250 million term loan and a $200 million revolving line of credit, effective July 14, 2022. This replaces an existing structure, extinguishing a total of $480 million in previous loans. The new loans have a maturity date of July 2027, with interest rates starting at Term SOFR plus 1.625%. CEO Stephen G. Oswald emphasized the favorable refinancing environment, positioning the company for organic growth and strategic investments. Details are available in the Company's SEC filings.

Positive

• Secured a new five-year credit facility with improved terms.
• Lower initial interest rates compared to extinguished loans, enhancing financial flexibility.

Negative

• None.

Lowering Interest Rate Pricing and Upsizing Revolver

SANTA ANA, Calif., July 18, 2022 (GLOBE NEWSWIRE) -- Ducommun Incorporated (NYSE: DCO) (“Ducommun” or the “Company”) today announced that effective July 14, 2022, it entered into a new credit facility consisting of a $250 million term loan and a $200 million revolving line of credit to replace its existing debt structure. In connection with the transaction, the Company extinguished its existing $140 million term loan, its existing $100 million unused revolving line of credit, and its other existing $240 million term loan, which would have matured in December 2024, December 2024, and November 2025, respectively. The new term loan and new revolving line of credit will mature in July 2027.

The initial variable rate on the new term loan is Term SOFR plus 1.625%, subject to adjustments based on the Company’s leverage ratio. At the time of extinguishment, the variable rates of the loans being extinguished were LIBOR plus 1.75% on the $140 million term loan, with an outstanding balance of approximately $110 million, and LIBOR plus 4.00% on the $240 million term loan, with an outstanding balance of approximately $145 million.

This new credit facility, combined with the forward interest rate swaps the Company entered into in November 2021 for an aggregate total notional amount of $150 million that will be effective on January 1, 2024 and expiring on January 1, 2031, locks in key components of the Company’s debt management strategy.

“We chose to execute an opportunistic refinancing of our existing credit facility mid-term, with the goal of securing a new five year credit facility while in a favorable term loan environment,” said Stephen G. Oswald, chairman, president and chief executive officer. “We are very happy with the outcome of the new credit facility financing and combined with our interest rate swaps, feel we have an effective debt structure that the Company can utilize to drive organic growth as well as continued investment in strategic acquisitions.”

Detailed information regarding the new credit facility is included in the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission.

About Ducommun Incorporated

Ducommun Incorporated delivers value-added, innovative manufacturing solutions to customers in the aerospace, defense and industrial markets. Founded in 1849, the company specializes in two core areas – Electronic Systems and Structural Solutions – to produce complex products and components for commercial aircraft platforms, mission-critical military and space programs, and sophisticated industrial applications. For more information, visit Ducommun.com.

Forward Looking Statements

This press release includes "forward looking statements" within the meaning of the federal securities laws relating to Ducommun Incorporated as discussed above, including statements relating to Ducommun’s expectations relating to the effectiveness of its debt structure and future organic and inorganic growth prospects, and similar expressions that concern Ducommun’s intentions or beliefs about future occurrences, expectations, or results. Forward looking statements are subject to risks, uncertainties and other factors that may change over time and may cause actual results to differ materially from those that are expected. It is very difficult to predict the effect of known factors, and Ducommun cannot anticipate all factors that could affect actual results that may be important to an investor. All forward-looking information should be evaluated in the context of these risks, uncertainties and other factors, including those factors disclosed under “Risk Factors” in Ducommun’s reports filed with the SEC, including the Company’s Quarterly Reports on Form 10-Q, Annual Reports on Form 10-K, and Current Reports on Form 8-K. The forward looking statements included in this press release are made only as of the date of this press release, and Ducommun does not undertake any obligation to (and expressly disclaims any such obligation to) update the forward looking statements to reflect subsequent events or circumstances.

CONTACTS:

Suman Mookerji, Vice President, Corporate Development and Investor Relations, 657.335.3665

FAQ

What is the new credit facility amount for Ducommun (DCO)?

Ducommun has secured a $250 million term loan and a $200 million revolving line of credit.

When does the new credit facility for Ducommun (DCO) mature?

The new credit facility matures in July 2027.

How does the new term loan's interest rate compare to the previous loans for Ducommun (DCO)?

The new term loan starts at Term SOFR plus 1.625%, lower than the previous loans which had higher rates.

What was the purpose of the refinancing by Ducommun (DCO)?

The refinancing aims to secure a favorable credit structure for organic growth and strategic acquisitions.

When was the new credit facility for Ducommun (DCO) announced?

The new credit facility was announced on July 18, 2022.