S&P puts DRS on watch

Standard & Poor's put DRS Technologies Inc. on CreditWatch negative including its $338.6 million senior secured credit facility at BB-.

S&P said the watch placement follows the announcement that DRS will acquire Integrated Defense Technologies Inc. for $550 million. DRS will be acquiring IDT's outstanding common stock for $12.25 a share cash plus 0.1875 shares of DRS stock, subject to a collar. In addition, DRS will be repaying IDT's $175 million of outstanding net debt. The cash portion of the transaction, including repaying IDT's debt, totals $437 million and is to be financed with cash on hand, additional bank borrowings and the issuance of debt securities.

The increased debt is expected to result in weakened credit protection measures for DRS, S&P said.

The acquisition will improve DRS' product and program diversity, as well as expand its business with the U.S. Air Force and other government agencies. Revenue for the combined companies is expected to be around $1.2 billion in fiscal 2005 ending March 30, 2005.

S&P changes Integrated Defense watch to negative

Standard & Poor's changed its CreditWatch on Integrated Defense Technologies Inc. to negative from developing including its $174.875 million term B loan due 2008, $38.875 million term A loan due 2007 and $45 million revolving credit facility due 2007 at BB-.

S&P said the revision follows the announcement that IDT is being acquired by DRS Technologies Inc. for $550 million.

IDT focuses on defense electronics, addressing niche markets for electronic test equipment, warfare simulators, communications monitoring, and specialty radars. Some well-supported programs, with a high percentage of sole-source contracts, mitigate participation in the highly competitive domestic defense industry, S&P said.

Nevertheless, the business risk profile remains well below average, with the firm facing much larger defense competitors and normal industry risks of program cancellations and cost overruns. IDT recently won a contract, teamed with Cubic Defense Applications, to supply aerial combat training equipment for U.S. Air Force, Navy, and Marine aircraft worth $535 million (70% of which will go to IDT), the largest in the company's history.

S&P withdraws Veridian

Standard & Poor's withdrew its ratings on Veridian Corp. including its senior secured debt at BB-.

The ratings were put on CreditWatch with positive implications on June 9 following the announced acquisition of Veridian by General Dynamics Corp.

The ratings withdrawal reflects General Dynamics' repurchase of all of Veridian's outstanding debt, S&P added.

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