Veridian has expanded its $200 million credit facility to $360 million in order to back the company's $227 million acquisition of Signal, an information technology and engineering services provider to the Department of Defense and other U.S. government agencies. Veridian decided to add on to the current facility rather than take out a new loan because of the facility's recent June 2002 closing, saidMaureen Crystal, director of investor relations. "Why would you go through all that work again?" she asked, adding that the add-on was an easier and quicker way to increase Veridian's funds.
Veridian increased its six-year "B" term loan from $130 million to $270 million and its five-year revolver from $70 million to $90 million. Pricing on the existing facility was linked to a leverage-based grid ranging from 21/ 4 - 31/ 4% over LIBOR and a prime spread of 1-2%, Crystal noted. She did not yet know exact pricing on the expanded facility, but she affirmed that Veridian predicts the LIBOR-based interest rate on borrowings under the facility for the upcoming fourth quarter would be approximately 5.3%.
Wachovia Securities underwrote both the newly amended and former credits, having had a long relationship with the Arlington, Va., company, Crystal noted. Wachovia also was involved in Veridian's initial public offering last June.
The expansion and the acquisition both closed on Sept. 24, after six weeks of closing conditions and approvals. "I think things moved along well," Crystal said in reference to the add-on process. In addition to the expanded facility, the acquisition was financed with $25 million in subordinated seller's notes bearing 9.5% interest and available cash.