The bonds of Computer Sciences Corp. continued to drop last week as talk of a leveraged buyout grew louder. Industry sources say that the LBO could be as large as $12 billion. If so, it would be the largest leveraged buyout of a technology company, surpassing the $11.3 billion LBO of SunGard earlier in the year. The Blackstone Group, Texas Pacific Group and Warburg Pincus, along with defense contractor Lockheed Martin, are the names that have popped up as a possible team to buy the company.
Two weeks ago, the company's bonds dropped several points each before steadying. Last week's results brought no solace to weary investors. Three of the four traded bonds of CSC dropped Nov. 1, the day the proposed price of the LBO reached the market.
The '09 bonds dropped to 99.76 before recovering to 101.63, the '011 bonds hit 102.88, and then rebounded to 106.00. The '13 bonds dipped to 90.94 before coming up slightly to 91.88. The '08 bonds hit their low of 93.75 last Wednesday. They inched up to 94.00 by last Thursday.
The biggest losers in the two-week period since the beginning of the buyout rumors have been the '08 bonds, which dropped 2.64 points and the '13 bonds which had a similar drop of 2.16.
Calls to Warburg Pincus and Lockheed Martin were not returned. Officials at Blackstone Group and Texas Pacific Group declined to comment.