Erickson Air-Crane Inc.
) after a successful negotiation with financial institutions was
able to enhance its five-year revolving credit facility to $125
million. On May 2, the company entered into a $100 million,
five-year revolving credit facility with a group of financial
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This credit facility will carry an interest rate of 325-450 basis
points over the London Interbank Offered Rate ("LIBOR"). Erickson
Air-Crane intends to use this credit facility for general
We believe this new credit facility will allow Erickson Air-Crane
to fund a portion of its back-to-back acquisitions announced in
May 2013. These acquisitions are a part of the company's strategy
to expand inorganically. Erickson Air-Crane expects these newly
acquired assets to be immediately accretive to its earnings.
Moreover, the enhanced credit facility could also be used to
pursue organic growth objectives. Erickson Air-Crane will have
adequate funds to diversify into other end markets and expand its
reach in geographical areas.
The long-term debt-to-capital ratio of the company is 31.5%,
higher than the peer group average of 24.7%. However, Erickson
Air-Crane currently trades at 8.67x 12-month forward earnings, a
39.1% discount to the peer group average of 14.24x. In addition,
its ROE in the trailing twelve months is higher than the industry
average of 15.5%. This signifies that the financial position is
strong enough to meet its debt obligations.
Erickson Air-Crane could also utilize a portion of the funds
raised from the issue of senior notes to replenish its credit
Erickson Air-Crane currently retains a Zacks Rank #1 (Strong
Buy). In addition to Erickson Air-Crane other defense
operators worth accumulating now are
Wesco Aircraft Holdings, Inc.
Elbit Systems Ltd.
Alliant Techsystems Inc.
). All these companies presently carry a Zacks Rank #2 (Buy).