A J.P. Morgan-led arranger group is circulating price talk on the $980 million incremental first-lien term loan due January 2027 for Amentum Holdings LLC that will finance its acquisition of DynCorp International Inc., according to sources. Commitments are due at noon ET on Oct. 29.
Price talk for the covenant-lite term loan due January 2027 is L+425-450, with a 0.75% Libor floor, offered at 99. There are two pricing step-downs of 25 basis points each at 0.5x and 0.75x inside closing first-lien net leverage, and an additional 25 bps step-down upon a qualifying IPO. Lenders are offered six months of 101 soft call protection.
At talk, the yield to maturity is 5.30%-5.56%.
RBC Capital Markets, BMO Capital Markets, Citizens, Morgan Stanley and UBS are joint lead arrangers on the deal.
S&P Global Ratings assigned a B issue-level rating and 3 recovery rating to the loan, and affirmed the corporate rating of B, while revising the outlook to negative, from stable. Moody’s affirmed the B2 corporate rating of Amentum and downgraded the first-lien facility rating to B1, from Ba3. Amentum Government Services Holdings LLC is the borrower.
Amentum announced on Sept. 24 that it would acquire DynCorp, a provider of aviation and logistics support services, from Cerberus Capital Management. The purchase price is $1.055 billion, according to Ratings. Closing of the acquisition is expected in the fourth quarter.
The issuer was last in the market in January when it placed a $1.09 billion covenant-lite first-lien term loan due January 2027 (L+400, 0% floor) to finance the carve-out of AECOM Technology's Management Services business by Lindsay Goldberg and American Securities, which was subsequently rebranded as Amentum. There are two 25 bps pricing step-downs tied to net first-lien leverage, and an additional 25 bps step-down upon completion of a qualifying IPO.
Financing for the LBO also included a $335 million covenant-lite second-lien term loan and a $200 million revolver.
DynCorp is also a loan issuer. In August 2019 the company placed a $360 million TLB due August 2025 in a refinancing at pricing of L+600, with a 0% floor. That loan included a secured leverage covenant.
Amentum is a contractor to the U.S. federal government, serving various departments and agencies, including the Department of Defense, Department of State and Department of Energy, as well as departments and agencies of allied governments, such as the U.K. Nuclear Decommissioning Authority and the U.K. Ministry of Defence.