Engility closes $450 million facility priced at Libor plus 225-325 bps

By Marisa Wong

Madison, Wis., Aug. 12 - Engility Holdings, Inc. said it has replaced its existing $400 million senior secured credit facility with a new $450 million senior secured credit facility.

Engility entered into the new credit agreement on Aug. 9 with Bank of America NA as administrative agent, according to an 8-K filing with the Securities and Exchange Commission. The prior facility, dated July 17, 2012, was terminated upon closing of the new facility.

The new five-year facility consists of a $200 million term loan and a $250 million revolving credit line with a $50 million letter-of-credit sublimit and a $25 million swingline loan sublimit.

The facility also contains an accordion feature that allows Engility to increase availability by up to an additional $150 million.

At closing, Engility had total indebtedness of $313 million, of which $113 million was outstanding under its revolving credit line, according to a Monday press release.

The new facility reduces the company's quarterly principal payments on its term loan to $2.5 million from $12.6 million, with the initial payment beginning on Dec. 31.

Interest is equal to Libor plus an applicable margin of 225 basis points to 325 bps based on the company's consolidated leverage ratio. The current Libor rate is about 3.05%, reduced from 5.75% under the prior facility, the press release noted.

Proceeds will be used to repay existing debt, to provide ongoing working capital and for general corporate purposes.

"This new facility significantly reduces our future interest expense, substantially enhances our cash flow and provides us with additional financial flexibility to grow our business," Engility chief executive officer Tony Smeraglinolo said in the press release.

The pure-play government services contractor is based in Chantilly, Va.

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