Fairbanks Morse sets first- and second-lien term loan price talk

By Sara Rosenberg

New York, June 4 – Fairbanks Morse Defense released price talk on its $510 million seven-year senior secured first-lien term loan (B2/B) and $155 million eight-year second-lien term loan (Caa2/CCC+) with its bank meeting on Friday, according to a market source.

The first-lien term loan is talked at Libor plus 475 basis points with a 0.75% Libor floor and an original issue discount of 99, and the second-lien term loan is talked at Libor plus 825 bps with a 0.75% Libor floor and a discount of 98.5, the source said.

The first-lien term loan has 101 soft call protection for six months, and the second-lien term loan has hard call protection of 102 in year one and 101 in year two.

The company’s $740 million of credit facilities also include a $75 million five-year revolver (B2/B).

Jefferies LLC, BMO Capital Markets and UBS Investment Bank are the lead arrangers on the deal.

Commitments are due at 4 p.m. ET on June 17, the source added.

Proceeds will be used to refinance existing debt and fund a distribution to shareholders.

Fairbanks Morse Defense is a Beloit, Wis.-based provider of propulsion systems, ancillary power, motors and controllers for the U.S. Navy and U.S. Coast Guard, and provider of associated parts and maintenance services.

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