CHANTILLY, Va.--(BUSINESS WIRE)--Engility Holdings, Inc. (NYSE: EGL) announced that Engility Corporation, a wholly owned subsidiary of the Company, successfully closed its previously announced private offering of $300 million aggregate principal amount of 8.875% senior notes due 2024 and refinanced its prior credit facilities. As part of the credit facility refinancing, the Company closed two term loans: a $200 million term loan maturing in 2020 bearing interest at the London interbank offered rate (“LIBOR”) plus 4.25% with no floor, and a second term loan of $680 million maturing in 2023 bearing interest at LIBOR plus 4.75% with a one percent floor. The Company also successfully closed an undrawn revolving credit facility of $165 million. The Company now has net debt of approximately $1.1 billion.
Upon the closing of the debt refinancing, the Company lowered its weighted average cost of debt from approximately 8.9% to approximately 6.5%. In addition, the Company extended its weighted average debt maturity by approximately two years and increased its undrawn revolving credit facility by $50 million to $165 million. The Company estimates that it will realize approximately $23 million in annualized interest expense savings as a result of the debt refinancing transactions.
Total interest expense in 2016 is now expected to be approximately $134 million, of which approximately $118 million is cash interest expense. The 2016 cash interest expense includes $22 million in transaction fees, offset in part by $9 million in cash interest savings for the remainder of the year. The Company anticipates making mandatory and voluntary prepayments on the new debt in the range of $50 million to $60 million from the date the debt refinancing closed to the end of 2016.
In the third quarter of 2016, the Company expects to record an expense of approximately $28 million, including transaction fees and the non-cash write-off of previously capitalized fees associated with the prior credit facilities, and capitalize approximately $14 million of fees associated with the debt refinancing. This estimate is preliminary and will be finalized in the third quarter when we complete the accounting analysis to determine the deferral and expense treatment related to new and existing financing fees.
The Company intends to use the net proceeds from the offering of the Notes, together with borrowings under its new term loan facilities, to repay in full all of its outstanding indebtedness under its prior credit facilities, including any premiums, fees and expenses in connection therewith, with any remaining proceeds to be used for general corporate purposes.
About Engility
Engility Holdings, Inc. (NYSE: EGL), a leading provider of mission-critical and highly technical services to the U.S. government, is engineered to make a difference. Built on a five-decade commitment to our customers and our country, Engility delivers world-class performance, efficiency and value in a broad range of services, including engineering and technology life cycle support, program and business support and specialized technical consulting. Headquartered in Chantilly, Virginia, and with offices around the world, Engility supports customers throughout the defense, intelligence, space, federal civilian and international communities, drawing on our intimate understanding of customer needs, our deep domain expertise and our highly skilled employees to develop and deliver on-target solutions.
