J.P. Morgan approached Alliant Techsystems and suggested that the company refinance its $472 million "B" term loan in order to achieve lower pricing. "Our advisor suggested that the timing was right," said Eric Rangen, cfo, explaining that Alliant had been performing well and there was strong demand in the market for quality paper. As a result, the Edina, Minn., company was able to lower its interest rate spread by 75 basis points to LIBOR plus 21/ 4%, he noted.
In addition, the company took the opportunity to increase the institutional tranche, now designated as a "C" term loan, by $53 million to help fund its $52 million acquisition of The Boeing Company's ordnance business. Alliant chose to fund the purchase with the increase in the now $525 million institutional tranche so as not to use up any of its acquisition-related baskets, Rangen said. The loan is still set to mature in 2009.
Alliant's present credit structure came to be when the company amended a previous credit facility in April 2001. In addition to the original "B" piece, the facility included a six-year, $250 million revolver and six-year, $300 million "A" term loan. The "A" tranche has since been paid down. "We generate a lot of cash," Rangen said, noting that the company wanted to de-lever as soon as possible. The revolver remains in place and was undrawn at the time of the institutional refinancing.
J.P. Morgan built a relationship with the company's former cfo, Scott Meyers, and provided Alliant with quick financing to back its acquisition of Thiokol in April 2001, Rangen noted. Wachovia Bank, U.S. Bank, Credit Lyonnais and TD Securities also hold major roles on the credit.