EDO Corp., a New York-based supplier of engineered products for use in the defense and space industries, has snared a new $140 million credit line that arms the company for an acquisition spree. "EDO has already acquired a number of companies using cash on hand, but with the interest-rate environment, we thought it was an appropriate time to put in place the line," said William Frost, v.p., of administration for EDO.
EDO is actively pursuing an acquisition strategy and is looking for companies in the same space, Frost noted. Previous purchases include the assets of Calif. defense electronics firm Condor Systems for $112.3 million in the Summer and the acquisition of Dynamic Systems for $15 million last year, he said. Dynamic provides professional and technology services primarily to the Department of Defense and other government agencies. "We would not do so well in the grocery business," Frost commented.
Citibank leads the new line, which can be increased to $200 million, Frost said. The credit provides sub-limits up to $125 million in acquisition financing and up to $125 million is stand-by letter of credit financing. Meanwhile, EDO has cash on hand of $150 million, he said. Pricing on the undrawn line, which has no credit rating, is LIBOR plus 11/ 4%. Fleet National Bank is syndication agent and Wachovia Bank is documentation agent on the facility. The credit replaces a $69 million line, which had no outstanding indebtedness. Citi leads the line because the bank acquired EAB Bank, Frost noted. "The acquisition put them in the picture," he said. New banks joined the syndicate to enable the expansion of the credit, but Frost declined to name the firms.