TASC sets launch of $645 million in incremental bank debt for Dec. 3

By Sara Rosenberg

New York, Nov. 24 – TASC Inc. is scheduled to hold a bank meeting at 10 a.m. ET on Dec. 3 to launch $645 million in incremental bank debt, according to a market source.

The debt consists of a $60 million incremental revolver due May 23, 2019, a $435 million incremental first-lien term loan due May 23, 2020 and a $150 million incremental second-lien term loan due May 23, 2021, the source said.

The revolver is talked at Libor plus 550 basis points, the first-lien term loan is talked at Libor plus 550 bps with a 1% Libor floor and the second-lien term loan is talked at a fixed rate of 12%, the source continued. Original issue discounts are still to be determined.

Financial covenants include a consolidated total net leverage ratio.

Barclays and Jefferies Finance LLC are the bookrunners on the deal, with Barclays the left lead on the first lien and Jefferies the left lead on the second lien. SunTrust Robinson Humphrey Inc. and KKR Capital Markets are the co-managers on the deal.

Proceeds will be used to repay existing debt at Engility Holdings Inc. and to fund a cash dividend to Engility shareholders in conjunction with Engility’s acquisition of TASC.

Net first-lien leverage is 2.9 times, and net total leverage is 4.4 times, the source added.

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.

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

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