Aerospace and defence communications equipment developer Emrise Corporation has finally paid off the remainder of its private equity-provided credit agreement, marking the a major milestone in its turnaround strategy.
On 29 June, the company made a…
Aerospace and defence communications equipment developer Emrise Corporation has finally paid off the remainder of its private equity-provided credit agreement, marking the a major milestone in its turnaround strategy.
On 29 June, the company made a US$225,000 payment on its 15.5% US$1m term loan A note and as a result of this early payment, the remaining US$275,000 was cancelled.
The note was part of a larger US$26m credit facility that Emrise secured from private equity firms GVEC Resource and Private Equity Management (PEM) back in November 2007 and has since sought to pay down.
That debt, which was split between a US$7m revolver, a US$6m term loan note and a US$10m acquisition facility, was secured by a first priority lien on all Emrise’ assets. With the company suffering significantly during the economic downturn, it struggled to meet the terms of the debt and was forced to conduct a series of asset sales throughout 2010 and 2011 to reduce its leverage.
To that end, Emrise offloaded its RO Associates, Advanced Control Components and Custom Components subsidiaries and as a result cut its debt burden to around US$1m.
The company then completed the sale of its CXR Halcyon telecommunications test equipment product line at the beginning of 2012 and used the US$300,000 of proceeds, alongside cash-on-hand, to repay US$500,000 of the debt.
Having now repaid the note in its entirety, Emrise chairman and CEO Carmine Oliva commented: “The payoff of this note puts a lengthy and very difficult situation behind us. In addition to paying off the PEM note, we believe the company has made other significant progress in implementing its turnaround strategy and is well positioned to achieve its revenue and profit goals in 2012 and beyond.”
Oliva noted that as a result of the early payoff of the note with PEM, the company expects to record a gain on the transaction in this year’s second quarter ended 30 June 2012.
