VSECU · VSE Corporation Tangible Equity Units

VSE Corporation completed the acquisition of Precision Aviation Group (PAG) on May 5, 2026, for a total upfront consideration of $2.025 billion, consisting of $1.75 billion in cash and approximately $275 million in newly issued Rollover Purchaser Shares (exchangeable for VSE common stock). Additionally, there is a contingent earnout of up to $125 million based on PAG's 2026 profitability targets. The acquisition was financed through a combination of equity raised in February 2026 (approximately $1.3 billion net proceeds from common stock and tangible equity unit offerings) and a new $900 million Term Loan B facility, along with an upsized revolving credit facility from $400 million to $500 million. The Term Loan B matures in 2033 and bears interest at SOFR plus 2.00% (or ABR plus 1.00%), with a potential 25 bps reduction based on leverage. The revolving facility matures in 2030 and carries a spread of 1.25%-2.25% over SOFR. The credit agreement includes customary covenants and events of default. In connection with the transaction, VSE entered into an exchange and redemption agreement granting the seller the right to exchange its Rollover Purchaser Shares for VSE common stock on a one-for-one basis, with automatic redemption after three years. Registration rights were granted to the seller, requiring VSE to file a shelf registration statement within 90 days. Lock-up agreements restrict the seller from transferring shares for staggered periods: for the initial shares, 33.33% released at 6, 12, and 18 months; for earnout shares, 50% at 3 and 6 months after issuance. The acquisition is expected to be immediately accretive to VSE's Adjusted EBITDA margins and expands VSE's global footprint with 61 locations across 8 countries.