VSE Corporation Completes Desser Aerospace Acquisition

VSE Corporation (NASDAQ: VSEC; “VSE”, or the “Company”), a leading provider of aftermarket distribution and maintenance, repair and overhaul (“MRO”) services for air, land and sea transportation assets for commercial and government markets, announced today it has closed its previously announced acquisition of Desser Holding Company LLC (“Desser Aerospace”), a global aftermarket solutions provider of specialty distribution and MRO services. Concurrent with the purchase of Desser Aerospace, VSE sold Desser Aerospace’s Proprietary Solutions businesses to the Loar Group Inc. (“Loar”), a diversified manufacturer and supplier specializing in aerospace and defense.

MANAGEMENT COMMENTARY

“We are excited to officially welcome the talented Desser Aerospace team to our VSE Aviation business,” stated John Cuomo, President and CEO of VSE Corporation. “The acquisition marks an important step on our path to increase the Company’s exposure to the high-growth, higher-margin aviation distribution and MRO markets. By combining Desser Aerospace’s distribution and repair capabilities with VSE Aviation’s aftermarket business, we have broadened our product and service portfolio and created a platform for geographic expansion into international markets.”

"VSE Aviation and Desser Aerospace have long been committed to providing market-leading, technical solutions that enhance the value and performance of their customers’ aircraft," said Ben Thomas, President of VSE Aviation. "We're excited to bring these two teams together as we look to create one organization focused on supporting the unique needs of our combined customer bases."

AGREEMENT TERMS

VSE acquired Desser Aerospace for a total cash consideration of $124 million, subject to customary working capital adjustments. In a separate transaction, the Company concurrently sold Desser Aerospace’s Proprietary Solutions businesses, including Seginus Aerospace, AOG Aviation Spares, and DAC Engineered Products to Loar, for a total cash consideration of $30 million. The total net cash outlay for the assets VSE acquired is $94 million.

The Company amended its existing credit facility with its lending syndicate in connection with the acquisition. The amendment provided for an incremental $90 million Term Loan A and a revision of certain financial covenants of the existing credit facility.

Upon closing, the Company funded $90 million of the purchase price with the proceeds from Term Loan A and a $4 million drawdown on its existing credit facility.

ADVISORS

Jones Day served as legal counsel to VSE Corporation. Jefferies LLC served as financial advisor to Desser Holding Company LLC.