Fitch Rates TransDigm's Proposed Secured Facilities 'BB-/RR2'; Affirms IDR At 'B'

NEW YORK--June 13, 2006--Fitch Ratings expects to assign a 'BB-/RR2' rating to TransDigm Inc.'s (TDI) senior secured revolving credit facility and senior secured first lien term loan associated with the recapitalization of both TDI and TransDigm Group (TDG). Fitch also affirms the following Issuer Default Ratings (IDRs):

TDG

-- Issuer Default Rating (IDR) 'B'.

TDI

-- Issuer Default Rating (IDR) 'B'.

The Rating Outlook is Stable. Fitch expects to withdraw the ratings of the existing TDG senior unsecured loan and the existing TDI senior secured facilities upon retirement. Approximately $1.05 billion of debt is covered by the ratings.

The change in capital structure will allow TDG to retire higher cost debt, extend maturities and increase liquidity. The new revolving credit facility and term loan will both have lower margins than the existing loan at TDG, the revolving credit facility at TDI and the term loan at TDI. Maturities will be extended with the facilities expiring in 2013 versus the current 2010. Liquidity will be enhanced with the revolver increasing in size to $150 million from $100 million. The difference in size between the proposed term loan and the existing TDG loan and the existing TDI term loan is expected to be utilized for retiring a portion of the existing TDI senior subordinated notes and fees and expenses associated with the recapitalization. (The tender offer was priced yesterday for all these notes.)

TDG's ratings reflect strong consolidated free cash flow; high margins; diverse portfolio of products providing components on most commercial jet aircraft, as well as a number of U.S. military platforms; barriers to entry for competitors due to proprietary designs for most TDG products and the costs to original equipment manufacturers to certify these components; role as a sole-source provider for the bulk of sales; significant commercial aftermarket business, which along with military sales helps offset the cyclicality of commercial jet manufacturing; and management's history of successful acquisitions and managing a leveraged business.

Concerns focus on TDG's high leverage, acquisition strategy, and the potential for exogenous shocks to the commercial aerospace market. Lesser concerns include the possibility of lower margin contracts on some of its military business, the possibility of pricing pressures from original equipment manufacturers (OEM), and the potential for cost overruns on fixed price contracts.

The Stable Outlook reflects the current strong environment for commercial and military aircraft production and continued growth in the commercial aftermarket due to increasing air travel and a continued high operational tempo for the U.S. military.

The Recovery Ratings (RRs) and notching in the debt structure reflect Fitch's recovery expectations under a scenario in which distressed enterprise value is allocated to the various debt classes. The recovery rating for TDI's proposed senior secured revolving credit facility and the proposed senior secured first lien term loan ('RR2', expected 71%-90% recovery) reflects significant recovery as it is secured by substantially all the assets of TDI and its subsidiaries. (This recovery rating and the associated issue rating could be changed should TDI raise up to an additional $250 million permitted under its secured facilities that would be pari passu with the proposed secured facilities.) Recovery should also benefit from significant, albeit reduced from the existing capital structure, cushions of subordinated debt and equity.

Fitch's Recovery Ratings (RR), introduced in 2005, are a relative indicator of creditor recovery on a given obligation in the event of a default. A broad overview of Fitch's RR methodology as it relates to specific sectors, including a Case Study webcast, can be found at www.fitchratings.com/recovery.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site. The issuer did not participate in the rating process other than through the medium of its public disclosure.