Science Applications plans $600 million term B, $400 million notes

By Sara Rosenberg

New York, Feb. 6 – Science Applications International Corp. has received a commitment for a $600 million seven-year incremental covenant-lite term loan B and plans to issue $400 million of notes to help fund its acquisition of Unisys Federal, according to an 8-K filed with the Securities and Exchange Commission on Thursday.

Citigroup Global Markets Inc. is the lead arranger on the debt.

Based on the commitment letter, the term loan is expected to be priced at Libor plus 225 basis points with a 0% Libor floor and include 101 soft call protection for six months and amortization of 1% per annum.

Backing the notes is a commitment for a $400 million one-year senior unsecured bridge loan priced at Libor plus 300 bps, increasing by 50 bps every three months, with a 0% Libor floor.

Under the agreement, Unisys Federal, a provider of infrastructure modernization, cloud migration, managed services, and enterprise IT-as-a-service through scalable and repeatable solutions to U.S. federal civilian agencies and the Department of Defense, is being bought for $1.2 billion.

Other funds for the transaction will come from cash on hand.

Closing is expected by May 1, subject to customary conditions, including HSR regulatory clearance.

Net leverage will be around 4.5x at close.

Science Applications is a Reston, Va.-based technology integrator.

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