URS scaled back its planned $250 million bond offering by $25 million as the market demanded a higher yield than expected. With price talk in the 12% range, Credit Suisse First Boston and Wells Fargo Bank were able to shift allocation to the "A" term loan of the accompanying bank deal, a banker said, adding that some covenants changed in the process. In addition, pricing reportedly was flexed up by an undisclosed amount on the $350 million "B" term loan, but this could not be confirmed. Pricing was set to open at LIBOR plus 31/ 2%. Calls to CSFB and Wells Fargo were not returned.
The "A" loan is now $125 million, while the $200 million revolver remains unchanged, according to the banker. The financing package backs URS' $500 million acquisition of EG&G Technical Services from The Carlyle Group and refinances $354 million in existing debt (LMW, 8/12).
The bank deal provoked positive reaction from most buysiders looking at the deal, although some expressed concerns. The asset-light nature of the business and the fact that competitor Washington Group International performed poorly in the bank market worried some investors. Furthermore, contracts are on a revenue-recognition basis, which means revenue can fluctuate heavily, one investor added. David Nelson, treasurer of URS, and Kent Ainsworth, cfo, did not return calls.