Ducommun readies Thursday launch for $230 million credit facility

By Sara Rosenberg

New York, May 24 - Ducommun Inc. has scheduled a bank meeting for Thursday with a 10:30 a.m. ET start time at the Waldorf Astoria in New York to launch its proposed senior secured credit facility, according to a market source.

Based on filings with the Securities and Exchange Commission, it is expected that the facility will be sized at $230 million, comprised of a $190 million six-year covenant-light term loan and a $40 million five-year revolver.

Official price talk on the deal is not out yet, but the filings had the tranches expected at Libor plus 325 basis points with a 1.25% Libor floor. The filings also said that if the company's corporate credit/family rating is less than B1 or less than B+, the spread will be increased by 25 bps to Libor plus 350 bps.

Furthermore, according to the filings, the revolver will have a 75 bps unused fee, and the term loan will have 101 soft call protection for one year and amortization of 1% per year, with the balance due at maturity.

The revolver will be subject to a maximum total leverage ratio but only if the sum of any amounts outstanding under the revolver plus letters of credit exceeds $1 million, or the total amount of outstanding letters of credit exceeds $5 million.

Proceeds, along with an expected $200 million senior unsecured notes offering, will be used to fund the acquisition of LaBarge Inc. for $19.25 per share in cash, or $310.3 million.

As a backup for the bonds, the company has received a commitment for a $200 million senior unsecured bridge loan with pricing of Libor plus 675 bps if ratings are B3/B- and Libor plus 750 bps if ratings are lower, with a 1.25% Libor floor.

UBS Securities LLC and Credit Suisse Securities (USA) LLC are the joint lead arrangers and bookrunners on the debt, with UBS the administrative agent and left lead on the credit facility and Credit Suisse the administrative agent on the bridge loan.

In addition to funding the acquisition, about $33.5 million of the debt proceeds will be used to refinance existing debt at Ducommun and LaBarge, $14.7 million will be used to put cash on the balance sheet and $31.5 million will be used for transaction and financing fees.

Closing is expected to take place in the second quarter, subject to approval of LaBarge shareholders and certain other customary conditions, including expiration of applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

Ducommun is a Carson, Calif.-based provider of engineering and manufacturing services to the aerospace and defense industry. LaBarge is a St. Louis-based supplier of electronics manufacturing services.

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