Littlejohn & Co. portfolio company Wyle Laboratories will significantly increase leverage to buy the aeronautics services business of General Dynamics Advanced Information Systems. Wyle previously had a small amount of debt. Now, pro forma for 2004, total debt-to-EBITDA is slightly over five times for the combined businesses. "Financially speaking they're going to start out with a fair amount of financial leverage," noted Joshua Davis, an analyst with Standard & Poor's. He added though that the acquisition will substantially increase the size of the company's business.
The credit comprises a $30 million revolver, a $100 million first-lien term loan and a $50 million second-lien term loan. Price talk is LIBOR plus 3 1/4% on the first lien and LIBOR plus 6 1/2% on the second lien. Wachovia Securities and Credit Suisse First Boston are the lead arrangers.
Wyle is a testing and engineering firm with a contractually based backlog of business. "It's a solid business with a very good track record of providing niche technical services to federal government agencies," Davis said. "Their focus is in aviation and aerospace. They have longstanding relationships with the Department of Defense, NASA, so forth." But the company is subject to budgetary changes and may face problems with the rate of outsourcing the government does, he added. Bankers and a spokesman for the company and Littlejohn declined comment.