MILAN (Reuters) – Italian aerospace and defense group Leonardo canceled $ 300 million in related-party debt last year from its DRS unit, which is currently preparing for a listing on the NYSE, said the unit in a file filed with the United States Securities and Exchange Commission. .
After the deal, New Jersey-based DRS saw its total net debt drop to $ 427 million last year, from $ 712 million in 2019, according to the filing.
The canceled debt was part of a $ 2 billion credit agreement between US Holding, a wholly-owned subsidiary of the Leonardo Group and DRS, and provided for a term loan maturing in 2022, paying an interest rate of 7.5% .
Leonardo filed an initial public offering (IPO) from DRS last month with the aim of listing a minority stake in the unit.
To prepare for the next New York Stock Exchange listing, DRS has announced plans to repay $ 237 million in related party loans and issue $ 450 million in new debt.
The defense electronics division intends to retain future profits for growth and does not plan to pay a regular cash dividend, the unit said on file. He said Leonardo, who currently owns 100% of DRS, will receive all proceeds from the IPO.
DRS said adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) improved to $ 268 million last year, from $ 234 million in 2019, while EBITDA margin on sales increased from 8.6% to 9.6%.
To gain access to classified data and bid on classified programs for the U.S. Department of Defense, independent managers will exercise voting rights tied to DRS shares held by Leonardo, the file said, referring to a revised proxy agreement that governs relations between the unit and its main investor.
Reporting by Francesca Landini; edited by Jason Neely and Bernadette Baum