Alion sets price talk for $300 million secured notes due November 2014

By Paul A. Harris

St. Louis, March 10 - Alion Science and Technology Corp. set price talk for its $300 million offering of senior secured notes due November 2014 (B1/B) on Wednesday, according to an informed source.

The notes are talked with a 10% cash coupon and a 2% payment-in-kind coupon, to price at a discount, and to yield approximately 13% plus detachable warrants for 10% of the company.

The books close at noon ET on Thursday, and the deal is set to price thereafter.

Credit Suisse has the books for the Rule 144A and Regulation S with registration rights offering.

The notes come with three years of call protection. However 10% of the issue may be called annually at 103.

The notes also feature a change-of-control put at 101%.

Proceeds will be used to repay the company's first-lien credit facility and to take out its subordinated notes and warrants.

Alion will also put in place a new $25 million revolving credit facility to replace its existing revolver.

The company is a McLean, Va., technology solutions provider delivering technical expertise and operational support to the Department of Defense.

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