The Carlyle Group has tapped Lehman Brothers and Citibank to lead the financing funding its $159 million acquisition of Garrett Aviation Services from General Electric Co. A bank meeting was held last Thursday to launch syndication of the credit, noted Dan Allen, Garrett's cfo. The deal comprises a $60 million revolver at LIBOR plus 2 1/2%, $147 million first-lien term loan at LIBOR plus 2 3/4% and $80 million second-lien term loan at LIBOR plus 5 1/4%, a banker said.
Carlyle will combine Garrett with Piedmont Hawthorne, an existing Carlyle portfolio company, a Carlyle spokesman said. Garrett provides aircraft modification and maintenance services, while Piedmont is a fixed base operator. Proceeds from the credit will be used to back a recap of Piedmont. Carlyle Partners II will purchase all of the Piedmont common stock held by Carlyle Partners II for $182.5 million and repay Piedmont's existing credit. The new credit is under MRO Acquisition Corp., a subsidiary of Piedmont. Lehman and Citi bankers declined comment.
The private equity firm also has another deal in the market in the same sector. J.P. Morgan, Lehman and Credit Suisse First Boston are leading a $310 million credit backing Carlyle's $670 million acquisition of the Standard Aero division of Dunlop Standard Aerospace Group (LMW, 8/2). "Our strategy is to buy low, sell high," said the Carlyle spokesman. "Aerospace, because of the war and 9/11, is still hurting. We find it to be an appealing sector right now." The Standard Aero credit comprises a $50 million revolver and $260 million "B" loan, both at LIBOR plus 2 3/4%. Standard Aero provides turbine engine maintenance, repair and overhaul for industrial gas turbines and aircraft engines.