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Kratos sees bond-market return in June for refinancing, CEO says

Kratos Defense & Security Solutions Inc. may seek to refinance bonds in June when an early payment penalty declines after the military contractor ended efforts to do so last year, according to CEO Eric DeMarco.

The San Diego-based company can call $625 million of 10 percent, first-lien bonds for 105 cents on the dollar starting June 1, according to data compiled by Bloomberg. That would cost $31.5 million to repay, down from an estimated $45 million that caused Kratos to cancel a refinancing in November, Chief Financial Officer Deanna Lund said in a telephone interview.

Kratos (Nasdaq: KTOS), which designs and owns technology used in everything from aerial drones to weapons sensors, may offer a mix of bonds and loans to repay the debt, DeMarco said in the same March 21 interview. The company prefers bonds that lack restrictive covenants sometimes included in loans, though it may take out loans in order to further cut interest costs if it can do so without covenants, DeMarco said.

“With bonds, if we were to acquire somebody or do something, you don’t need to get an amendment or waiver or consent,” DeMarco said. “We expect to be able to gain a significant reduction on our 10 percent coupon.”

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Kratos Defense & Security Solutions

Company Website

4820 Eastgate Mall Ste., 200
San Diego, CA 92121

Kratos Defense & Security Solutions Executive(s):

Eric DeMarco

  • Chief Executive Officer

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