Computer Sciences term B firms at $750 million, Libor plus 300 bps

By Sara Rosenberg

New York, Oct. 28 – Computer Sciences Government Services Inc. finalized its seven-year covenant-light term loan B size at $750 million, compared to revised talk of up to $1 billion and an initial size of $1.25 billion, according to a market source.

In addition, pricing on the term loan B was set at Libor plus 300 basis points, the low end of the Libor plus 300 bps to 325 bps talk, and a step-down was added to Libor plus 275 bps when total net leverage is 2.5 times, the source said.

Furthermore, the 101 soft call protection on the term loan B was extended to one year from six months, and the MFN sunset provision was removed.

The term loan B still has a 0.75% Libor floor and an original issue discount of 99.5.

With the term loan B downsizing, the company upsized its five-year revolver to $700 million from $500 million, its three-year term loan A-1 to $600 million from $500 million and its five-year term loan A-2 to $1.45 billion from $1.25 billion.

Pricing on the revolver and term loan A-2 is still Libor plus 175 bps, and pricing on the term loan A-1 is still Libor plus 162.5 bps.

RBC Capital Markets LLC, Mitsubishi UFJ Financial Group, Bank of America Merrill Lynch and Scotiabank are the bookrunners on the $3.5 billion senior secured credit facility (Ba2/BB+/BBB), with RBC left lead on the term loan B and Mitsubishi left lead on the revolver and term A debt.

Proceeds will be used to fund the $10.50 per share special cash dividend being paid in the spinoff of Computer Sciences Government Services from Computer Sciences Corp., to finance the $390 million acquisition of SRA by Computer Sciences Government Services from Providence Equity Partners and SRA’s founder, Ernst Volgenau, as well as members of its management team, and to refinance SRA’s existing $1 billion of net debt.

Total net leverage at close will be 3.1 times, the source added.

Computer Sciences Government Services is a Falls Church, Va., provider of IT services to the U.S. federal government. SRA is a Fairfax, Va.-based provider of IT and professional services to the U.S. federal government.

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