UBS and GE Capital last week launched syndication of a $302.5 million facility for ILC Industries to provide a $156 million dividend to sponsor Behrman Capital and refinance existing debt. The facility consists of a six-year, $30 million revolver with pricing of LIBOR plus 50 basis points undrawn and LIBOR plus 2 3/4% drawn. It also includes a six-and-a-half year, $195 million first-lien term loan with pricing of 2 3/4% and a seven-year, $77.5 million second-lien term loan with pricing of LIBOR plus 6 1/2%. The second lien has call protection of 102, 101.
Grant Behrman, founder and managing partner of Behrman Capital, felt ILC has grown significantly since the private equity fund took it over in the beginning of 2003, and said it was "prudent to do a dividend recap now." He explained, "The company's EBITDA has grown from $36 million when we bought the company to almost $60 million. It has significant capacity and we thought things at the company were doing well, so we took advantage of the business position."
Acquisitions could be in ILC's future, but Behrman said he does not have any immediate plans. "We have been and will continue to look for add-on acquisitions, but we believe the company's organic growth prospects are very sound and together with management, we will execute on those plans." Acquisitions could be for one of ILC's two businesses Data Device Corp. (DCD), which provides communication chips to the military, or Dover, which makes advanced soft-good products, such as space suits. It recently supplied the space suits to the astronauts on Discovery and has supplied suits to all manned U.S. space missions since the mid-1960s. Customers include the Department of Defense, NASA and private industries.
UBS has been the sole lead for the Bohemia, N.Y.-based company for the past few years, leading the $130 million deal to back the leveraged buyout of ILC by Behrman. That facility consisted of a $115 million "B" loan priced at LIBOR plus 4% but was flexed to LIBOR plus 4 3/4% with a 100 basis points up-front fee and a $15 million revolver priced at LIBOR plus 3 1/2%. The bank also led a recap for ILC to provide a dividend to the private equity firm in January 2004. GE has been involved in ILC syndicates before, but never as a co-lead. Behrman said GE was pumped up to that role because "it is a terrific institution, has been very responsive and provided very attractive terms."