Anteon International Corp. recently hit the market for a new $350 million loan that allows the company to capitalize on cost savings and increased flexibility. The company was able to achieve interest cost savings by using a portion of the loan proceeds to buy back approximately $73 million of 12% senior subordinated notes. The company is now poised to save about $6 million a year, he added. "We were restructuring the capital structure to take advantage of the market and lower our borrowing costs," explained Kelly Baker, v.p. and treasurer for Anteon.
The new bank loan was also tapped to repay the company's existing $200 million revolver and $18 million "A" loan, leaving the new revolver available for a possible acquisition. "We have been acquisitive in the past and it remains part of our corporate strategy," explained Baker. "Generally speaking, the company has done about one acquisition per year," he said, noting that Anteon is completing the process of integrating its May 2003 acquisition of Information Spectrum.
The new credit comprises a $200 million, five-year revolver and a $150 million, seven-year term loan. The term loan was upsized by $25 million due to an oversubscription of the tranche. "It was described as a frothy market," commented Baker. The new "B" piece is the company's debut institutional tranche. Baker said the company had considered tapping the high-yield market but felt that the advantages offered by the "B" loan market were more attractive. He cited the lack of prepayment penalties, the low amortization and a tenor similar to the high-yield markets as a few examples of the benefits.
The new term loan is priced at LIBOR plus 2%. Baker would not comment on identities of the company's lenders, but he said there were some new lenders in the deal and some former lenders who did not participate. Anteon wanted to increase commitment levels, giving lenders a reasonable exposure and the company a balanced bank group comprising regional banks and money center banks, he explained.