L-3 boasts oversubscribed notes sale, investment-grade debt ratings

By Devika Patel

Knoxville, Tenn., Nov. 30 – L-3 Communications Holdings, Inc.’s management is proud of strong credit ratings that allowed it to sell $550 million of 3.85% 10-year senior notes in an oversubscribed offering.

The company, said chairman and chief executive officer Michael T. Strianese, maintains its investment-grade debt ratings to ensure that it has unrestricted freedom over its spending.

“We have industry-leading high earnings to cash flow conversion,” Strianese told the Credit Suisse 4th Annual Industrials Conference in Palm Beach, Fla. on Wednesday.

“We have a very efficient capital structure. We maintain an investment-grade credit [rating].

“Yesterday, we completed an offering of 10-year notes – again, investment grade, very good market reception, it was oversubscribed many times over.

“We need [our investment-grade rating], I think it’s very important and it makes our access to the capital market very, very easy.

“It also gives us the freedom to deploy our cash in ways that we think are important to our shareholders, like increasing dividends, share repurchases [or] acquisitions. With investment-grade credit, that is virtually unrestricted,” Strianese said.

Notes

On Tuesday, L-3 Communications Corp. sold $550 million of 3.85% 10-year senior notes (Baa3/BBB-/BBB-) with a spread of 160 basis points over Treasuries. The notes have a make-whole call until three months before maturity and then a par call.

BofA Merrill Lynch, Barclays, Deutsche Bank Securities Inc., MUFG, Scotia Capital (USA) Inc., SMBC Nikko Securities America, Inc., SunTrust Robinson Humphrey Inc., U.S. Bancorp Investments Inc. and Wells Fargo Securities LLC were the bookrunners.

Proceeds will be used to replenish the amount of cash used and the amount of revolving credit borrowings drawn, to repay $200 million of 3.95% senior notes that matured on Nov. 15, 2016 and to redeem all of the company’s $350 million 1.5% senior notes due 2017.

L-3 announced on Wednesday morning that the 1.5% notes will be redeemed on Dec. 30.

L-3 Communications is a New York-based contractor in command, control, communications, intelligence, surveillance and reconnaissance systems, aircraft modernization and maintenance and government services. It is also a provider of electronic systems used on military and commercial platforms.

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