Leidos units gets $1 billion term loan, $1 billion revolving facility

By Mary-Katherine Stinson

Lexington, Ky., March 14 – Leidos Holdings, Inc., wholly owned subsidiary Leidos, Inc. as borrower and other wholly owned domestic subsidiaries as guarantors entered into a credit agreement on March 10 providing a $1 billion senior term loan facility and a $1 billion senior revolving facility, according to an 8-K filing with the Securities and Exchange Commission.

The facilities mature five years from closing. The revolving facility is subject to up to two additional one-year extensions under the terms of the credit agreement.

Borrowings bear interest at SOFR with a 10 basis points adjustment plus an applicable margin that varies depending on the borrower’s credit rating. The margin is in five tiers ranging from 100 bps to 150 bps.

The borrower will pay to the lenders under the revolving facility a commitment fee from 9 bps to 25 bps.

Based on the company’s current ratings, the applicable margin for SOFR-denominated borrowings is 125 bps and the commitment fee is 12.5 bps.

The financial covenants require that the borrower maintains, as of the last day of each fiscal quarter beginning with the first fiscal quarter of 2023, a ratio of adjusted consolidated total debt to consolidated earnings before interest, taxes, depreciation and amortization of not more than 3.75x, subject to two increases to 4.5x following a material acquisition, and a ratio of EBITDA to consolidated interest expense of not less than 3.5x.

Citibank, NA is the administrative agent.

MUFG Bank, Ltd. is the syndication agent.

Joining Citibank and MUFG as joint lead arrangers and bookrunners are BofA Securities, Inc., Capital One, NA, JPMorgan Chase Bank, NA, PNC Capital Markets LLC, Sumitomo Mitsui Banking Corp., Bank of Nova Scotia and U.S. Bank NA for the revolving facility and term loan facility.

State Bank of India, New York Branch is a joint lead arranger and bookrunner for the term loan facility.

Bank of America, NA, Capital One, NA, JPMorgan Chase Bank, NA, PNC Bank, NA, Sumitomo Mitsui Banking Corp., Bank of Nova Scotia and U.S. Bank NA are the documentation agents.

Bank of Montreal, Fifth Third Bank, NA, Goldman Sachs Bank USA, Regions Bank and TD Bank, NA are the senior managing agents.

Leidos and the borrower used the proceeds of the term loan facility plus cash on hand to repay all debt and terminate the commitments under the company’s Jan. 17, 2020 credit agreement and for any certain fees and expenses related to the refinancing of the terminated credit agreement.

The revolver is undrawn.

Leidos is a Reston, Va.-based technology, engineering and science company for the defense, intelligence, civil and health markets.

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