Integrated Defense Technologies completed a $135 million add-on to its existing $45 million "B" loan with a $5 million increase at the last minute, said William Collins, v.p. of administration for Integrated. Lead bank CIBC World Markets attempted to get the company as much capacity as possible for its $146 million acquisition of the Gaithersburg, Md., operations of BAE Systems, now known as Signia-IDT, he said. "[CIBC] tries up until the last minute to get you the best deal in the market. That, to us, is refreshing," Collins said.
Integrated was able to increase the add-on from $130 million to $135 million as more contracts for the defense-products company provided Integrated with a cushion in terms of working capital requirements, Collins explained. The increase in the add-on, in turn, left more availability on the company's $40 million revolver--of which $7.5 million had been tapped. There is also an existing $40 million "A" piece that is included in Integrated's $260 million bank debt facility.
The "B" tranche is now $180 million with pricing set at LIBOR plus 4%, while the pro rata is priced at LIBOR plus 3%, based on a grid ranging between LIBOR plus 2-4%. The old $45 million "B" loan had a LIBOR plus 23/ 4% spread. Covenants were also updated, including measures for capital expenditure limits, investments, asset sales and maintenance of certain financial covenant ratios.
Integrated selected CIBC to lead the credit because of the company's long relationship with the lender, Collins explained. "They're very professional," he said, adding that CIBC was involved in the company's prior credit led by First Union, as well as its initial public offering led by Credit Suisse First Boston. Given interest rates, the bank debt market has better pricing than other markets right now, Collins added, explaining why Integrated selected bank debt to finance the acquisition.