Engility details incremental debt plans for TASC acquisition

By Sara Rosenberg

New York, Oct. 29 – Engility Holdings Inc. has received a commitment for a $585 million unsecured bridge loan in connection with its purchase of TASC Inc., according to an 8-K filed with the Securities and Exchange Commission on Wednesday.

However, it is expected that the bridge debt will be replaced by TASC with a $435 million incremental senior secured first-lien term loan and $150 million of senior secured second-lien term loan borrowings or debt securities.

In addition, TASC plans on getting a $40 million incremental senior secured revolver.

Barclays and Jefferies Finance LLC are leading the debt.

The new debt will be incurred under and pursuant to increases in the existing TASC credit facility, which will be amended.

Backing the second-lien loan and or debt securities is a commitment for a $150 million senior secured second-lien bridge loan pursuant to a bond engagement letter between Jefferies LLC and Barclays, the filing said.

The incremental debt will be used to refinance existing Engility debt and to fund a special cash dividend of about $11.40 per share for each Engility share owned, subject to final adjustments.

Engility will be assuming TASC’s existing debt as part of the transaction.

Net debt to 2014 adjusted EBITDA will be about 4.7 times; however, due to the strong free cash flow of the combined entity, Engility expects that it will reduce its net debt to trailing 12-month adjusted EBITDA to around 2.5 times by the end of 2017.

Under the agreement, TASC is being bought from Kohlberg Kravis Roberts & Co. LP and General Atlantic LLC in an all-stock transaction valued at about $1.1 billion, including the assumption of about $613 million of net debt.

On a pro-forma basis, following the close of the transaction, the combined company is expected to generate around $2.5 billion in revenue and about $210 million in combined adjusted EBITDA in 2014, excluding cost savings.

Closing is expected in the first quarter of 2015, subject to approval of stockholders of both Engility and TASC, consummation of the contemplated financing, regulatory approvals including clearance under the Hart-Scott-Rodino Antitrust Improvement Act of 1976 and other customary conditions.

Engility is a Chantilly, Va.-based pure-play government services contractor. TASC is a Chantilly, Va.-based professional services provider to the national security and public safety markets.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.