Wachovia Securities and Bear Stearns are planning to launch syndication after Labor Day of an amended and restated credit for DRS Technologies to partially back its $550 million acquisition of Integrated Defense Technologies (IDT). A banker explained that add-on institutional term debt would be put in place on top of a refinanced credit facility. He did not state the size of the expected add-on debt, as details are still being finalized. DRS' existing credit includes a $125 million revolver priced at LIBOR plus 23/4% and a $213.6 million "B" loan priced at LIBOR plus 3%. A Bear Stearns official declined to comment and a Wachovia Banker did not return calls.
Parsippany, N.J.-based DRS, a defense electronics company, is also issuing bond debt to back the acquisition. The banker said Bear Stearns will be on the left for the bonds, while Wachovia is on the left for the bank deal. DRS will acquire IDT for cash and common stock. The cash portion of the acquisition, together with $175 million in assumed IDT debt, will total about $437 million. Besides the bank and bond debt, DRS will also use cash on hand to finance the acquisition of IDT.
DRS is trying to become one of the top mid-tier defense companies with better positioning when approaching the government, explained James Ryan, DRS' manager of investor relations.
DRS had previously increased its credit by $100 million late last year to back a merger between its subsidiary Prince Merger Corp. and Paravant (LMW, 12/23). The credit was put in place prior to that in 2001, also with increased term debt, in order to back its acquisition of the Sensors and Electronics Business of The Boeing Company (9/01). Wachovia is serving as DRS' financial advisor, while Bear Stearns is advising IDT on the transaction.