Goldman Sachs, GE Capital and Lehman Brothers are leading a $485 million deal for IPC Acquisition Corp. The facility consists of a $285 million term loan, a $50 million revolver and a $150 million second lien. Price talk on the first lien is LIBOR plus 2 3/4% and although no price was mentioned at the bank meeting last Tuesday, pricing on the second lien is rumored to be in the LIBOR plus 6-7% range. The company provides "turret" communication systems, which include data switching, voice recording and multimedia capabilities and are used by banks, brokers and insurance companies. It is owned by Goldman Sachs Private Equity Group.
Moody's Investors Service assigned a B2 rating to the revolver and first lien and a B3 to the second lien. In its report, the rating agency said the proceeds of the facility will be used to repurchase about $210 million of shares outstanding, tender for about $165 million of existing 11.5% senior subordinated notes and refinance about $48 million of an existing credit facility.
The ratings reflect IPC's decision to recapitalize the company by "using its free cash flow generating ability to increase leverage and to repurchase equity," Moody's states in the report. It calculates that, pro forma for the transaction, leverage will have more than doubled from 2.8 times to 6.2 times. Timothy Whelan, cfo, did not return calls.