Leidos Holdings shops $2.15 billion in pro debt at Libor plus 225 bps

By Sara Rosenberg

New York, May 20 – Leidos Holdings Inc./Abacus Innovations Corp. are in market with $2.15 billion in revolver and term loan A debt that is talked at Libor plus 225 basis points, according to a market source.

The debt, which launched with a bank meeting during the week of May 16, is split between a $750 million five-year revolver at Leidos, a $690 million five-year term loan A at Leidos, a $400 million three-year term loan A at Abacus and a $310 million five-year term loan A at Abacus.

The company’s $3,281,000,000 senior secured credit facility (BBB-) also includes a $1,131,000,000 seven-year term loan B at Abacus that is expected to launch at a later date, the source said.

Citigroup Global Markets Inc., MUFG, Bank of America Merrill Lynch, J.P. Morgan Securities LLC, Goldman Sachs & Co., Scotiabank and Wells Fargo Securities LLC are the lead banks on the credit facility.

The credit facility is being done in connection with the merger of Leidos with Lockheed Martin Corp.’s Bethesda, Md.-based realigned Information Systems & Global Solutions business (Abacus).

Proceeds from the Leidos credit facility will be used with cash on hand to pay a special dividend to Leidos stockholders in an amount not to exceed about $1.03 billion and to repay existing debt.

The Abacus credit facility will be used to make a special cash payment of $1.8 billion to Lockheed Martin.

The merger will result in Lockheed Martin shareholders receiving about 50.5% of the combined company on a fully diluted basis, with pre-transaction Leidos shareholders owning the balance.

Closing is expected in the second half of this year, subject to approval by the shareholders of Leidos, as well as regulatory approvals and customary conditions.

Leidos is a Reston, Va.-based provider of technology and sector expertise to customers in national security, health and engineering.

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