Science Applications gets approval to issue $670 million term loan B

By Angela McDaniels

Tacoma, Wash., March 20 – Science Applications International Corp. amended and restated its credit agreement on Tuesday to allow it to establish an up to $670 million senior secured term loan B, according to an 8-K filing with the Securities and Exchange Commission.

The amended credit agreement also gives the company the option to increase its term loan A by $100 million prior to the effectiveness of the term loan B and permits Science Applications’ proposed acquisition of Scitor Holdings, Inc.

The credit agreement continues to provide for a $200 million revolving credit facility and a $500 million term loan A, each maturing on Sept. 27, 2018. The principal amounts and interest rates are unchanged.

Once the term loan B closes, the credit facilities will become secured by liens on substantially all of the assets of Science Applications and its subsidiaries.

The amended credit agreement includes financial covenants that require, prior to the effectiveness of the term loan B, the maintenance of a leverage ratio of not greater than 3.25 times and an interest coverage ratio of at least 3.5 times.

Once the term loan B closes, Science Applications will become subject to the maintenance of a senior secured leverage ratio of not greater than 4 times until July 31, 2016 and, thereafter, not greater than 3.75 times.

Once the term loan B closes, Science Applications and its subsidiaries will become subject to further and additional restrictive covenants including with respect to fundamental changes and the disposition of assets, as well as an annual mandatory prepayment of a portion of its excess cash flow.

Citibank, NA is the agent. Bank of America, NA is the syndication agent.

Citigroup Global Markets Inc., Bank of America Merrill Lynch, PNC Capital Markets LLC, SunTrust Robinson Humphrey, Inc., U.S. Bank NA and Wells Fargo Securities LLC are the joint lead arrangers and joint bookrunners.

PNC Bank, NA, SunTrust Bank, U.S. Bank and Wells Fargo Bank, NA are the documentation agents.

Science Applications is a McLean, Va.-based technology integrator providing full life-cycle services and solutions in the technical, engineering, and enterprise information technology markets.

Scitor is a provider of systems engineering, financial and management consulting, information services and other services for corporate customers and government programs.

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