API Technologies talks $220 million facility at Libor plus 450-475 bps

By Sara Rosenberg

New York, May 12 - API Technologies Corp. launched its $220 million senior credit facility (B2/BB-) on Thursday with price talk Libor plus 450 basis points to 475 bps with a 1.25% Libor floor and an original issue discount of 99 to 991/2, according to a market source.

The facility consists of a $20 million three-year revolver and a $200 million seven-year term loan B.

The revolver has a 50 bps unused fee.

There is 101 soft call protection for one year on the B loan.

Amortization on the term loan B is 1% per annum with the balance due at maturity.

Financial covenants include a maximum total leverage ratio and a minimum interest coverage ratio.

Commitments are due on May 26.

Morgan Stanley & Co. Inc. is the lead bank on the deal.

Proceeds will be used to help fund the acquisition of Spectrum Control Inc. for $20 per share. The total purchase price is about $270 million.

Other funds will come from $102.6 million in equity and $3.7 million of cash from Spectrum Control.

The transaction is expected to close during the week of May 30, subject to customary conditions, including approval pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and approval of Spectrum's shareholders, which will be sought at a special meeting on May 27.

Pro forma leverage is 3.4 times, including identified cost reductions, EBITDA to interest expense is 5.2 times and debt to capitalization is 45.3%.

API is a Ronkonkoma, N.Y.-based provider of secure communications, electronic components and subsystems and contract manufacturing services to the defense and aerospace industries. Spectrum is a Fairview, Pa.-based designer and manufacturer of high performance, custom services for the defense, aerospace, industrial and medical industries.

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