CACI hits secondary market with B loan trading at plus 101 levels

By Sara Rosenberg

New York, April 23 - CACI International Inc.'s $550 million credit facility (Ba2/BB) allocated on Friday morning and by late afternoon the company's institutional paper was trading at plus 101 levels, with the bid seen at 101.125 and the offer seen at 101.375, according to a fund manager.

The $350 million seven-year term loan B is priced with an interest rate of Libor plus 200 basis points. This tranche was reverse flexed during syndication from Libor plus 225 basis points on strong demand.

The facility also contains a $200 million five-year revolver with an interest rate of Libor plus 200 basis points and a 50 basis points undrawn fee. This pro rata tranche was also reverse flexed during syndication from Libor plus 225 basis points. Furthermore, all the levels contained in the revolver's pricing grid were ratcheted down by 25 basis points as part of the flex.

It did not come as a big surprise that the deal reverse flexed since shortly after launching the deal was said to already have $700 million in commitments, making the institutional tranche about two times oversubscribed. This large oversubscription led many to speculate that the deal would end coming in at a 200 basis points spread.

A number of factors were previously cited as positive for this deal, including CACI being a good business that appears like it's worth a lot of cash, decent credit ratings, low total and senior leverage of 2.9 times, and high interest coverage of more than eight times.

Banc of America Securities LLC is the lead bank on the deal.

Proceeds will be used to finance the $415 million cash acquisition of American Management System Inc.'s Defense and Intelligence Group.

Closing on the acquisition is expected to take place by May and is conditioned on CGI Group Inc.'s successful completion of a tender offer for all of the outstanding shares of AMS for $19.40 per share or $858 million. The transactions are also subject to regulatory and government approvals.

Assuming the transaction is consummated in May, CACI estimates the acquisition of the Defense and Intelligence Group will add about $275 to $285 million to its fiscal year 2005 revenues and incremental earnings per share of about $0.14 to $0.17. The EBITDA margin for DIG in fiscal 2005 is expected to be 15% to 17%, according to a company news release.

During a conference call earlier in the month to discuss the acquisition, the company projected pro forma debt at June 30 of $415 million, pro forma debt/last-12-months EBITDA of 2.6 times at June 30, pro forma cash of $20 million and available borrowing capacity of $135 million under the new credit facility at June 30.

CACI is an Arlington, Va., provider of IT and network solutions. The Defense and Intelligence Group is a Fairfax, Va., provider of business management solutions to the U.S. government.

UGS PLM launch next week

UGS PLM Solutions is now expected to come to the bank loan market with its proposed credit facility some time next week, according to market sources, with some expecting Thursday to win out as the launch date. Previously, the deal was expected to launch in May.

The exact size and structure of the facility are still to be determined. However, it is known that the company will get total debt financing of approximately $1 billion between a new credit facility and a high-yield bond offering.

JPMorgan, Citigroup and Morgan Stanley are the lead banks on the credit facility.

Those same three banks will be leading the bond offering, but the order will be slightly different with Citigroup listed on the left and JPMorgan and Morgan Stanley.

Proceeds from the debt transactions will be used to help fund the previously announced acquisition of UGS PLM by Bain Capital, Silver Lake Partners and Warburg Pincus from Electronic Data Systems Corp. for $2.05 billion in cash.

UGS PLM is a Plano, Texas, provider of PLM software and related services.

ON Semiconductor closes

ON Semiconductor closed on its new $345.5 million credit facility (B3) consisting of a $25 million 31/2-year revolver with an interest rate of Libor plus 275 basis points and a 50 basis points commitment fee and a $320.5 million 41/2-year term loan F with an interest rate of Libor plus 275 basis points.

The term loan F was used to refinance about $320.5 million of term loans under the company's existing senior secured credit facilities, reducing the interest rate to Libor plus 275 basis points from Libor plus 325 basis points.

The reduced borrowing rate is expected to save the company about $1.6 million a year in interest expense based on the current loan balance, according to a company news release.

JPMorgan and Credit Suisse First Boston were the join lead arrangers on the Phoenix semiconductor company's deal, with JP Morgan acting as administrative agent.

"This is the third material transaction we have executed this year to reduce our interest expense and improve our balance sheet," said Donald Colvin, senior vice president and chief financial officer, in the release.

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