Aerospace and defence communications equipment developer Emrise Corporation has amended the repayment terms of its private equity provided debt as it seeks to repay the 15.5% US$1m term loan A note early.
The company announced that it had signed an…
Aerospace and defence communications equipment developer Emrise Corporation has amended the repayment terms of its private equity provided debt as it seeks to repay the 15.5% US$1m term loan A note early.
The company announced that it had signed an agreement with its lenders, GVEC Resource IV and Private Equity Management Group, that would see it secure a discount of up to 30% in consideration for early payment.
Emrise’s subsidiary CXR Larus Corporation is currently in the process of selling its CXR Halcyon telecommunications test equipment product line to LDDF Incorporated for approximately US$300,000 in cash. Once complete, Emrise plans to use the proceeds as well as cash-on-hand to pay around US$500,000 of the note that is now due on 29 February 2012 following the amendment.
Carmine Oliva, Emrise’s chairman and CEO, said that the company then intends to pay a further US$200,000 of the debt prior to 30 April 2012. If it does so, under the terms of the amendment agreement the note will be deemed paid in full, resulting in a US$300,000 discount from the original balance.
Oliva said: “We intend to pay off this note early, which will be an important milestone for Emrise as we focus on growing the company and increasing value to our stockholders. It will close a difficult and uncertain chapter in the history of Emrise, and mark the final payment of what at one time were loan balances to the lender of approximately US$26m. It will also finally eliminate the overhang of the debt and the stigma of the company’s business relationship with the lender.”
Emrise originally signed a US$23m three-year credit agreement with GVEC and PEM back in November 2007. The debt was split between US$7m revolving credit facility, a US$6m term loan note and a US$10m acquisition facility and was secured by a first priority broad lien on all of Emrise’s assets.
Having significantly struggled during the economic downturn, the company spent much of 2010 and 2011 restructuring the business in order to reduce this debt burden.
It mainly achieved this through a series of assets sales, with the company offloading its RO Associates, Advanced Control Components and Custom Components subsidiaries. The sale of the latter two enabled Emrise to repay all but the remaining US$1m of its debt.
While the company is in a much improved position, it reported a 96% year-on-year fall in losses in its Q3 results, the reorganisation and asset sales are likely to continue in 2012. In September of last year, Emrise hired boutique investment bank Rodman & Renshaw to advise it on identifying and negotiating potential strategic merger, acquisition or alliance targets.
Founded in 1983, Emrise designs, manufactures and markets electronic devices, sub-systems and equipment for aerospace, defence, industrial and communications markets.
