Technology and aerospace giant United Technologies Corp (UTC) has secured commitments for a US$2bn loan to support its US$18.4bn acquisition of Goodrich, the defence manufacturer.
JPMorgan, Citi, HSBC and BofA Merrill Lynch are joint lead arrangers,…
Technology and aerospace giant United Technologies Corp (UTC) has secured commitments for a US$2bn loan to support its US$18.4bn acquisition of Goodrich, the defence manufacturer.
JPMorgan, Citi, HSBC and BofA Merrill Lynch are joint lead arrangers, and will each provide US$500m under the agreement.
According to UTC, the loan will be issued shortly before the consummation of its acquisition of Goodrich, which it currently expects to close in mid-2012, despite recently entering a European Commission Phase 2 investigation.
“Any loan made pursuant to the term loan agreement would mature on December 31, 2012,” stated the company, which declined to comment further.
It will go towards replacing a 364-day bridge loan that was executed on 8 November 2011, with BofA Merrill Lynch, HSBC and JP Morgan, to initially fund the deal.
Goodrich’s shareholders overwhelmingly approved UTC’s takeover plan on 13 March 2012, which will see them receive US$127.50 in cash per common share. This represents a 47.4% premium to Goodrich’s closing price on 15 September 2011, the day before the takeover rumours were reported. It also represents a valuation multiple of 19.2x LTM EBITDA and 11.7x 2011 estimated EBITDA.
As well as securing US$2bn in debt, UTC also plans to sell off assets, including US rocket systems developer Rocketdyne, to raise around US$3bn to support the proposed transaction.
During a Q1 results call on 24 April 2012, UTC CFO Greg Hayes said he expected to sign a contract shortly with an undisclosed suitor for Rocketdyne.
Other assets that the conglomerate has identified for divestment before the end of the year include renewable energy firm Clipper Windpower, and three subsidiaries of manufacturer Hamilton Sundstrand: Milton Roy, Sullair and Sundyn.
In addition, UTC expects to raise US$1.5bn from mandatory convertible instruments to support the Goodrich transaction.
UTC is being financially advised by JP Morgan and Goldman Sachs for the Goodrich deal, with Wachtell, Lipton, Rosen & Katz providing legal advice. Goodrich has hired Credit Suisse and Citi as financial advisers, along with law firm Jones Day.
