US defence contractor L-3 Communications’ spun off government services unit began its first day of trading as a separate company on 18 July.
Shares in the pure play unit, called Engility Holdings, closed relatively level at the end of its first day on…
US defence contractor L-3 Communications’ spun off government services unit began its first day of trading as a separate company on 18 July.
Shares in the pure play unit, called Engility Holdings, closed relatively level at the end of its first day on the New York Stock Exchange at US$17.68. At the time of going to press, they the stock was trading up to around US$17.85.
L-3, whose board of directors approved the move in June, expects Engility to generate US$1.6bn net revenue for 2012.
Tony Smeraglinolo, president and CEO of Engility, said the company’s independence will help it access “substantial opportunities” that it was previously constrained from pursuing because of conflicts of interest with the L-3 group.
“I am excited about these new opportunities because they will allow Engility employees to do what they do better than anyone else – provide highly specialised support for our clients’ missions, whenever, wherever they need us, in a cost-effective manner,” said Smeraglinolo.
The tax free spin off saw L-3 shareholders, as of 16 July 2012, receive one Engility share for every six shares of L-3 common stock. Engility retained around US$10m of cash on hand following the transaction, but incurred approximately US$345m of debt. This debt will be used to pay L-3 a US$335m dividend.
L-3 plans to use proceeds from the dividend to redeem US$250m of 6.375% senior notes due 2015 on 26 July 2012. It also expects to repurchase up to US$75m worth of outstanding shares.
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