Copying and distributing are prohibited without permission of the publisher.


Deutsche, ABN Shop Aerojet “B” Loan

11 Sep 2002

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.

11 Sep 2002