Rockwell Collins enters three loan agreements totaling $7.35 billion

By Wendy Van Sickle

Columbus, Ohio, Dec. 22 – Rockwell Collins, Inc. entered into three credit agreements totaling $7.35 billion on Dec. 16 in connection with its anticipated acquisition of B/E Aerospace, Inc., according to an 8-K filing with the Securities and Exchange Commission.

The credit agreements provide for a $4.35 billion senior unsecured bridge facility, a $1.5 billion senior unsecured three-year delayed-draw term loan and a $1.5 billion senior unsecured five-year revolving credit facility.

JPMorgan Chase Bank, NA is the administrative agent of each credit agreement and the bookrunner and lead arranger of the bridge loan and term loan. It is joined as a bookrunner and lead arranger of the revolver by Citigroup Global Markets Inc. and Wells Fargo Securities, LLC.

For the revolver, syndication agents are Citibank, NA and Wells Fargo Bank, NA, and documentation agents are Credit Agricole CIB and Mizuho Bank Ltd.

The bridge commitments will be reduced on a dollar-for-dollar basis by net proceeds of certain equity and debt issuances. The bridge and term loans will terminate on the earlier of borrowing of the bridge loans, the termination or expiration of the merger agreement or 5 p.m. ET on Oct. 21, 2017.

Loans made under the bridge and term loan agreements will mature 364 days and three years from being borrowed, respectively.

Term loans must be repaid in quarterly installments of 2.5% of the total principal amount.

The revolver has two one-year extension options and a $300 million sublimit for letters of credit.

Also, $300 million of the revolver will not be available until consummation of the acquisition and will be terminated if the merger is called off or if it does not occur by 5 p.m. ET on Oct. 21, 2017.

Interest and commitment fees are based on the company’s credit ratings.

The bridge loan bears interest at Libor plus a margin ranging from 112.5 basis points to 150 bps, with step-ups of 25 bps every 90 days. Undrawn commitment fees will accrue beginning Jan. 21 and will range from 12.5 bps to 20 bps.

Term loans will bear interest at Libor plus 100 bps to 175 bps with an undrawn commitment fee of 9 bps to 25 bps immediately in effect.

Revolving loans will bear interest at Libor plus 91 bps to 150 bps with an undrawn commitment fee of 9 bps to 25 bps.

The bridge loan and new revolver replace Rockwell Collins’ existing 364-day credit agreement dated Feb. 5, 2016 and five-year credit agreement dated Sept. 24, 2013, which were terminated.

Rockwell is a communications and aviation electronics company based in Cedar Rapids, Iowa. It announced plans in October to purchase B/E Aerospace, a manufacturer of aircraft cabin interior products, for a total consideration of $8.3 billion, including about $6.4 billion in cash and stock plus the assumption of $1.9 billion in net debt.

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