API Technologies funds $200 million term B; syndication still ongoing

By Sara Rosenberg

New York, June 6 - API Technologies Inc. funded its $200 million five-year term loan B on June 1, but syndication on the tranche, as well as on a $15 million three-year revolver that has an option for a $5 million increase, is still in progress, according to a market source.

The company said in an 8-K filed with the Securities and Exchange Commission on Monday that the term loan B and the revolver are priced at Libor plus 600 basis points with a 1.5% Libor floor and that the term loan has 101 soft call protection for one year.

However, the filing also said that for a period of up to 90 days following the date of the credit agreement, terms are subject to customary market flex provisions, which could materially increase the cost of borrowing, in order to facilitate the syndication of the term loan by the agent.

The market source reiterated this point, saying that the pricing terms outlined in the filing are not final.

At launch, the senior credit facility (B2/BB-) was talked at Libor plus 450 bps to 475 bps with a 1.25% Libor floor and an original issue discount of 99 to 991/2, with the revolver having a 50 bps unused fee and the term loan B having 101 soft call protection for one year.

Financial covenants include a maximum total leverage ratio and a minimum interest coverage ratio.

Morgan Stanley & Co. Inc. is the lead bank on the deal.

Proceeds were used to help fund the acquisition of Spectrum Control Inc. for $20 per share. The total purchase price is about $270 million.

API is a Ronkonkoma, N.Y.-based provider of secure communications, electronic components and subsystems and contract manufacturing services to the defense and aerospace industries. Spectrum is a Fairview, Pa.-based designer and manufacturer of high performance, custom services for the defense, aerospace, industrial and medical industries.

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