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Cubic Corp. Agrees on Out-of-Court Deal With Lenders, Will Receive $175M in Capital

By: Harvard Zhang

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✨ Summary by AI at Octus
Cubic Corp. has secured a $175 million capital infusion through an out-of-court transaction with its lenders, with $100 million contributed by the lenders and $75 million by company sponsor Veritas Capital. The deal, which is pro rata and received unanimous lender consent, aims to address liquidity issues as the company faces financial challenges, including deferred interest payments on its loans. Fitch Ratings recently downgraded Cubic Corp., citing the deferral of interest payments as indicative of a distressed situation and highlighting the high risk of near-term default. Despite these challenges, Cubic Corp. had previously announced plans to receive $275 million in new liquidity to support operations and growth initiatives, alongside a significant debt reduction and maturity extension.

Privately held Cubic Corp. has agreed upon an out-of-court transaction with its lenders and will receive $175 million in fresh capital, according to sources.

Lenders will contribute $100 million for their part, with company sponsor Veritas Capital injecting the remaining $75 million, the sources said. The deal is pro rata in nature and received unanimous consent from lenders, they added.

Octus reported on Aug. 7 that the fare payment system maker and military simulation technology provider was considering selling certain assets and evaluating options to shore up liquidity, potentially on an out-of-court basis or through the chapter 11 process.

Cubic Corp. is advised by Kirkland & Ellis, PJT Partners and AlixPartners, while lenders are working with Davis Polk and Centerview Partners.

Fitch Ratings downgraded the company on Aug. 13, saying:
 

“Cubic’s deferral of the July 27, 2026 interest payment on its second-out term loan B and second-out term loan C marks the third straight quarterly deferral. The company also deferred the January 27 and April 27, 2026 payments under the previous credit agreement amendment. Fitch views the deferral as a DDE, as it reflects a material reduction in terms and Fitch believes it was executed to avoid an eventual probable default.

“The latest amendment, which received unanimous consent from 100% of the second-out term loan B and term loan C, extends the interest deferral period to include the July payment,” the ratings agency said. “Absent that consent, the grace period on the July payment runs only to Sept. 30, 2026 and the amendment itself operates as a notice of default for all three missed payments.

“The recurring need to defer scheduled cash interest and rely on lender consents is consistent with a distressed situation and supports the ‘CC’ rating, reflecting very high near-term default risk absent a sustainable operating and cash flow improvement.”

In July 2025, Cubic Corp. announced that it would receive $275 million of new liquidity from existing financial sponsors and lenders to support operations and accelerate investment in the company’s growth initiatives. Benefits of the transaction were said to include a $370 million reduction in total debt as well as a maturity extension on exchanged debt to May 2029.

An estimate of the company’s pre-transaction capital structure as of Jan. 31 is shown below:
 

Cubic Corp. and the advisors involved did not respond to requests for comment.

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