Leonardo enters into $500 million credit facility in two parts

By Wendy Van Sickle

Columbus, Ohio, Nov. 29 – Leonardo DRS, Inc. entered into a credit agreement on Nov. 29 with Bank of America, NA as administrative agent that provides for a five-year $225 million term loan A loan facility and a five-year $275 million revolver, according to an 8-K filing with the Securities and Exchange Commission.

The term A loan was fully drawn by the company at closing, and proceeds were used to refinance existing debt of the company and some of its subsidiaries, including outstanding related-party borrowings and to pay fees, commissions and expenses in connection with the credit facilities.

The revolver may be used by the company and some of its subsidiaries for working capital and other general corporate purposes.

Each existing and future direct or indirect U.S. subsidiary of the company provides an unconditional joint and several guarantee of the company’s obligations under the credit agreement.

The credit facilities bear interest on the outstanding principal amount at a rate per annum equal to term SOFR plus a margin of 137.5 basis points to 200 bps, based on the company’s total net leverage. The initial margin is 150 bps.

The unused line fee payable on the unused portion of the revolver will range from 20 bps to 35 bps, based on the company’s total net leverage . The initial unused line fee is 22.5 bps.

The credit agreement requires the company to comply with a maximum total net leverage ratio of 3.75 to 1.00, as well as maintain a net interest coverage ratio of at least 3.00 to 1:00. These ratios are determined as of the last day of each fiscal quarter, commencing with the first full fiscal quarter after the date of the credit agreement.

Bank of America, NA, JPMorgan Chase Bank, NA, MUFG Bank, Ltd. U.S. Bank NA and Credit Agricole CIB are the lead arrangers and bookrunners.

PNC Bank, NA, Wells Fargo Bank, NA, BNP Paribas, Fifth Third Bank, NA and Regions Bank are the documentation agents.

The defense contractor has headquarters in Arlington, Va.

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