Bank of America is set to lead the syndication of a $1 billion debt package for Precision Castparts Corp. (PCC), according to a company spokesman. The financing will help back the Portland, Ore.-based company's acquisition of SPS Technologies for $729 million. The package will include a $700 million credit with a $300 million term loan and a $400 million revolver, the spokesman said. He added that there is also a $300 million bridge facility included in the debt package.
The PCC spokesman did not state price talk or a specific bank meeting date, but said B of A would be lining up the financing over the next couple of months. New senior notes will also be involved in the deal. The entire transaction is expected to be completed by the end of this year, he noted. PCC's total equity consideration in the acquisition transaction, including after-tax payments, is $575 million.
The facility will also go toward refinancing the metal component manufacturer's existing credit as well as most of SPS' debt. The existing bank deal, also led by B of A and put in place in 1999, includes a $400 million revolver and a $550 million term loan. Pricing on the deal is at LIBOR plus 11/2%. Scotia Capital and Wachovia Securities are agents on the existing facility. A B of A banker did not return calls.
Moody's Investors Service states that PCC's pro forma debt and its ratio of debt-to-capital would rise to about $1.2 billion and 45% respectively. Moody's placed PCC's Baa3 senior debt ratings on review for possible downgrade following the acquisition announcement. "After the close of the acquisition, PCC will remain conservatively capitalized and committed to reducing debt and maintaining a strong credit profile," the company said in a release. SPS is a fastener and precision component producer for the aerospace, automotive and industrial markets.