ITT water, defense divisions to separate, issue $2.09 billion of debt

By Angela McDaniels

Tacoma, Wash., July 11 - ITT Corp. will split itself into three companies, and two of those companies plan to issue a combined $2.09 billion of debt, according to filings with the Securities and Exchange Commission.

ITT will spin off its water-related business and its defense and information solutions segment into two new companies: ITT WCO, Inc. and ITT DCO, Inc., respectively. ITT will distribute shares of the new companies to its shareholders.

At or prior to the distribution, ITT WCO expects to issue $1.2 billion of debt including senior notes and ITT DCO expects to issue $890 million of debt including senior notes.

ITT WCO will use the proceeds of its debt issuance to fund an $833 million cash transfer to ITT, to acquire YSI Inc. for $310 million and for general corporate purposes. YSI makes sensors, instruments, software and data collection platforms for environmental water monitoring.

ITT DCO will use the proceeds of its debt issuance to fund a $691 million cash transfer to ITT and for general corporate purposes.

Each spun-off company also plans to enter into a revolving credit facility. Borrowings will be used for working capital, capital expenditures and other general corporate purposes.

ITT said its goal is to complete the separation by the end of the year.

ITT is based in White Plains, N.Y., and will continue to supply highly engineered industrial products and applied technology to the aerospace, transportation, energy and industrial markets. ITT WCO will also be based in White Plains, and ITT DCO will be based in McLean, Va.

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