Noteholders have agreed to give engineering group Alion Science and Technology Corp. more time to restructure debt.
The company has extended the closing date for the refinancing of notes from July 31 to September 30. If the deal is not closed by the end of September, the noteholders have the right to terminate the refinancing support agreement, according to a filing with the U.S. Securities Exchange Commission.
Alion, headquartered in McLean, Va. provides engineering, information technology, naval architecture and operational services to businesses in the defense, government and commercial sectors.
Alion and the majority of the noteholders for the company's outstanding 10.25 percent senior notes due Feb. 1, 2015 came to a refinancing support agreement earlier this year. On July 22, the group amended the term sheet for the agreement, including the extension of the closing date.
Other terms modified in the amendment include the amount for a new first lien term loan, which has decreased from $300 million to $285 million, and will be separated into several tranches. The amount of a new second-lien term loan has increased from $50 million to $70 million, and series A preferred stock will be issued to the supporting noteholders. Other terms were also modified. For more on Alion's restructuring see "Alion Science Works to Refinance Notes."
Alion came to a refinancing support agreement with ASOF II Investments LLC and Phoenix Investment Advisor LLC, which hold about 67 percent of the notes, in December.
The company has been struggling, and as of March 31, had a $287.3 million deficit. The company has a history of losses. Alion had been able to pay debts with cash from operating activities for the past few years, but isn't able to pay the notes as they come due, which is why it has been working on refinancing. The companies losses and general financial position raise substantial doubt about its ability to continue as a going concern, or without the threat of liquidation, Alion says in a filing with the SEC.
The company has struggled from interruptions in government funding, including budget delays, debt ceiling limitations, government shutdowns, sequestration of Department of Defense spending cuts, since most of the company's contracts are from the government.
For the previous edition of Turnaround Tuesday, see "Struggling Drug Developer Zogenix Wins Massachusetts Lawsuit."
For more struggling companies, see Mergers & Acquisitions Distressed Company Watch List.