Pricing is flexed tighter on the $5.92 billion first-lien term loan for Veritas Capital-backed Peraton Corp. Arrangers are asking investors to confirm commitments today by noon ET, and allocations are expected to follow thereafter, according to sources.
Price talk for the seven-year covenant-lite TLB is now L+375 with a 0.75% Libor floor and an issue price of 99.5. That's revised from guidance at launch of L+400-425 at 99. Lenders are offered six months of 101 soft call protection.
At the revised terms, the yield to maturity is 4.67%, down from roughly 5.02%-5.28% under the original talk.
J.P. Morgan is leading the deal, and KKR Capital Markets, Barclays, Goldman Sachs, UBS, Macquarie and RBC Capital Markets are joint lead arrangers.
The loan was previously upsized to $5.92 billion, from $2.145 billion, to include financing for the $7.1 billion acquisition of Perspecta that was announced on Jan. 27. The loan will be allocated as a strip between the immediately funded $2.145 billion tranche and the additional $3.775 billion tranche for the Perspecta transaction that will have a delayed funding. The loans will become a single fungible tranche upon funding.
Note that ticking fees for the $3.775 billion delayed funding tranche were also revised and are now set at 100% of the spread beginning at day 46 after allocations. They were previously set at 50% of the spread for days 46-60 following allocation, stepping to 100% of the spread thereafter.
Proceeds from the original $2.145 billion portion of the financing are being used for the acquisition of the federal IT and mission support services business of Northrop Grumman, dubbed Dutchman, for $3.4 billion and to refinance existing Peraton debt. Additional financing includes an $855 million, eight-year second-lien term loan and a $300 million, five-year revolver.
In another revision to the transaction, the company added quarterly lender calls and MD&A.
First-lien facility ratings are B/B1/BB-, with recovery ratings of 3 and 2 from S&P Global Ratings and Fitch. Corporate ratings are B/B2/B, reflecting a one-notch upgrade by Moody's on Feb. 9. Ratings has the issuer's ratings on CreditWatch positive and expects to upgrade both the issuer and issue-level marks by one notch once the previously announced Perspecta deal is completed.
Peraton is a provider of technology services and solutions to federal government agencies, including space, intelligence, defense and civil.
