Harris closes $1 billion five-year revolver at Libor plus 150 bps

By Marisa Wong

Madison, Wis., July 8 – Harris Corp. established a new $1 billion five-year senior unsecured revolving credit facility on July 1, according to an 8-K filing with the Securities and Exchange Commission.

SunTrust Robinson Humphrey, Inc., Bank of Nova Scotia, Citigroup Global Markets Inc., HSBC Securities (USA) Inc., J.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Inc. and Wells Fargo Securities, LLC are joint lead arrangers and joint bookrunners. SunTrust Bank is administrative agent, issuing bank for letters of credit and swingline lender; and Bank of America, NA, Bank of Nova Scotia, Citibank, NA, HSBC Bank USA, NA, JPMorgan Chase Bank, NA and Wells Fargo Bank, NA are co-syndication agents.

The new facility replaces Harris’ prior $1 billion five-year senior unsecured revolver dated Sept. 28, 2012. Harris terminated the prior credit agreement, which was scheduled to terminate on Sept. 28, 2017, upon entering into the new facility.

The new credit facility includes a $70 million sublimit for swingline loans and a $175 million sublimit for letters of credit.

Borrowings may be denominated in dollars, euros, sterling or other currencies, with a non-U.S. currency sublimit of $200 million.

The company may request that lenders increase the maximum amount of commitments by up to $500 million.

Loans are due July 1, 2020, subject to two one-year extensions.

Interest is equal to Libor plus an applicable margin based on Harris’ senior long-term debt ratings. The applicable margin is initially 150 basis points but may range from 112.5 bps to 200 bps.

There is also a commitment fee that ranges from 12.5 bps to 30 bps, based on the senior debt rating. The commitment fee is initially 20 bps.

The credit agreement requires that Harris not permit its ratio of consolidated total indebtedness to total capital to be greater than 0.675 to 1.00 from and including May 29 until and including Feb. 29, 2016 and 0.65 to 1.00 after that.

At closing, no borrowings were outstanding under the credit agreement.

Also on July 1, Harris and Exelis Inc., as guarantor, entered into an amendment to the term loan dated March 16 with Morgan Stanley Senior Funding, Inc. as administrative agent.

The amendment updates some definitions to apply to the new revolver and makes other changes relating to restrictive covenants.

The telecommunications equipment company is based in Melbourne, Fla.

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