Deutsche Bank and ABN Amro are shopping
a $125 million "B" term loan for GenCorp subsidiary
Aerojet-General, backing its $90 million acquisition of General
Dynamics' ordnance and tactical systems, space propulsion and fire
suppression business. The 5.5-year loan, which is priced at LIBOR
plus 3%, also will be used to pay $5 million in transaction costs
and pay down $30 million in borrowings under the existing $150
million revolver. Deutsche Bank officials declined to comment, and
calls to ABN were not returned.
The current acquisition and financing will lead
to an increase in debt-to-total capital to 54% from 45%. Total
debt-to-EBITDAP (EBITDA before non-cash pension income) is
increasing from 3.4 times to 3.6 times, while senior
debt-to-EBITDAP will increase from 1.5 times to 2.2 times. The
credit has been given a BB rating by Fitch Ratings, while
the other two agencies have rated the deal Ba2/BB+.
In addition to the revolver, the existing bank
debt comprises a $76 million "A" term loan, which is led by a group
of banks that include ABN and Deutsche Bank. The two have prior
relations with the company, but a spokeswoman declined to comment
on why they were specifically selected to lead the financing. The
Sacramento, Calif., company is attempting to double the size of
Aerojet in the next three years through further acquisitions, in
addition to organic growth, she noted.