First Union launched last Friday syndication of a $240 million credit for DRS Technologies, backing the company's acquisition of the Sensors and Electronic Systems business of The Boeing Company. Parsippany N.J.-based DRS, a defense electronics company, is buying SES for $84 million and is wiping out an existing $160 million loan with Mellon Bank arranged in 1998, noted Richard Schneider executive v.p., treasurer and cfo of DRS. Mellon will be on the new credit, Schneider noted, but he declined to say which other banks will be involved or why First Union was chosen to lead.
Pricing is expected to be LIBOR plus 3% for the $100 million, five-year revolver and LIBOR plus 31/ 2% for the $140 million term-loan "B," which has been rated BB- by Standard & Poor's. "The defense business is very strong at the moment," said Schneider, commenting on the prospects for the credit. "The business is cyclical in nature and is coming out of years of low funding under the Clinton years. The long-term projections for the sector we play in are expected to be strong," he added.