July 6, 2012

Edac assets tied up in buyout of ex-Pratt Cheshire plant

Farmington aeroparts maker Edac Technologies Corp. pledged virtually everything it owns as collateral to persuade TD Bank to finance Edac's $8.2 million cash purchase of its new Cheshire manufacturing home, a regulatory filing shows.

Edac announced Monday it was scrapping a previous plan to move headquarters and consolidating much of its manufacturing to Plainville, instead buying Pratt & Whitney's former production plant at 500 Knotter Drive in Cheshire.

Months earlier, Edac spent $2.65 million -- including a $2 million state loan -- on a former General Electric industrial building in Plainville to house its operations.

Of the Cheshire property, Edac CEO Dominick Pagano said at the time it was financed by a TD mortgage but declared none of the loan's particulars.

According to Edac's 8-K filing with the Securities and Exchange Commission, TD amended its May 27, 2009 credit pact with Edac to include a $6.54 million, 10-year term loan to buy the site from Pratt's parent, United Technologies Corp. in Hartford.

The new loan, which closed on June 28, is secured by cross-guaranties on the business assets of Edac and its subsidiaries, Gros-Ite, Apex and Ebtec, the filing said. In addition, the lender obtained liens on Edac properties at 275 Richard St. in Newington; 10 New Britain Ave., Plainville;120 Shoemaker Lane in Agawam, Mass.; and on 500 Knotter Drive.

All the properties previously secured other outstanding borrowings Edac has with TD Bank, the filing said.

Edac says it expects to recoup a significant part of the purchase price from the net proceeds of the eventual sale of all its existing Connecticut properties, including the sale of the Plainville property.

Under the loan terms, Edac's interest is set at prime through June 28, 2013, then resets to an adjustable rate tied to the London Interbank Overnight Rate (LIBOR) plus three percentage points for the remaining nine years, the filing said.

However, an interest-rate swap agreement Edac negotiated with TD effectively locks its interest at 4.63 percent, the filing said.

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