DRS Technologies $350 million bank and bond financing via Bear Stearns, Wachovia

By Paul A. Harris and Sara Rosenberg

St. Louis, Aug. 26 - DRS Technologies $350 million of new debt to finance its acquisition of Integrated Defense Technologies will be led by Bear Stearns & Co. and Wachovia Securities, Inc., an informed source told Prospect News on Monday.

The financing will be comprised of new high yield notes and an increase in the company's existing term loan, according to a company spokesperson who added that the anticipated blended interest is approximately 5½%, with the term loan anticipated at 4½% to 5% and the bonds at 7½% to 8%.

Both the notes and the loan are expected to come into the market during the first two weeks of September, according to a market source.

On Monday, DRS and IDT announced the signing of a definitive merger agreement, under which DRS will acquire all of the outstanding stock of IDT for $17.50 per share, made up of $12.25 in cash and 0.1875 shares of DRS common stock, subject to a collar.

The cash portion of the acquisition, together with the debt of IDT to be refinanced, will total approximately $437 million at closing, according to a news release. Total consideration for the acquisition, including an estimated $175 million of IDT's net debt to be refinanced, is approximately $550 million, representing a multiple of 1.5x the revenues and 8.5x the EBITDA expected to be contributed by IDT during DRS's next full fiscal year ending March 31, 2005.

DRS Technologies is a defense electronics supplier based in Parsippany, N.J.

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