MISTRAS Group, a multinational provider of integrated technology-enabled asset protection solutions used to maximize the uptime and safety of critical energy, industrial and public infrastructure, entered into a new credit facility with a syndication of banks, led by JPMorgan Chase Bank and with Bank of America continuing as syndication agent.
The new credit facility consists of $315 million of aggregate credit, including a funded $125 million five-year term loan A and a committed $190 million five-year revolving facility. The maturity of the new credit agreement is July 30, 2027. The prior credit agreement was set to mature in December 2023.
The new credit facility significantly expands the total committed credit by almost $100 million at closing, which provides the company with the ability to fund future growth initiatives. The arrangement also includes a significant reduction in required term loan amortization, specifically decreasing the required payments to $1.6 million per quarter for years one and two, $2.3 million per quarter for year three and $3.1 million per quarter for years four and five. These reduced amounts compare to $5 million per quarter of amortization under the company’s prior credit agreement.
This credit facility also provides the company with leverage flexibility by increasing the maximum allowable total funded debt to 4.0 times adjusted EBITDA for the third quarter of 2022 through the second quarter of 2023 measurement periods, with a step down to 3.75 times for the third quarter of 2023 and all periods thereafter. The prior credit agreement had a maximum allowable total funded debt of up to 3.5 times adjusted EBITDA through maturity. The company also retained a $75 million uncommitted accordion.
“We are very pleased to maintain strong banking relationships with each of the seven premier financial institutions included within our bank syndicate,” Ed Prajzner, CFO of MISTRAS Group, said. “Since upsizing our facility in December of 2018 to finance the company’s Onstream acquisition, we are proud to have repaid nearly $80 million of debt to our bank group, especially during times when many of our end markets were weakened by the impact of the COVID-19 pandemic. This syndication was considerably oversubscribed and we are appreciative of our supportive bank group and their willingness to partner with us in creating shareholder value. This new credit agreement provides us with ample liquidity to fund our growth initiatives. And while the reduction of required term loan amortization provides us with additional leverage flexibility, we anticipate further deleveraging as our current capital allocation strategy remains to apply residual free cash flow to debt service.”
“This new financing enables MISTRAS to continue to pursue our strategic initiatives in data solutions and renewable energy, allows us to continue to serve our end markets, and provides the ability to continue winning over new customers and enhancing value to our existing customers,” Dennis Bertolotti, president and CEO of MISTRAS Group, said. “This agreement also provides us long-term flexibility to drive growth both organically and potentially via strategic acquisitions, return value to our shareholders and invest in our employees and infrastructure.”
