Ultra Electronics sets final terms on cross-border buyout loan

Final terms are out on the cross-border loan backing Advent’s buyout of Ultra Electronics Holdings PLC, leaving the deal split between a €450 million tranche priced at E+375 with a 0% floor offered at 99.50, and an $883.5 million piece at L+375 with a 0.5% floor offered at 99.75. Recommitments on the euros are due by 1 p.m. London time today, and for the dollars at 11 a.m. ET.

Barclays is sole physical bookrunner on the dollars, while Barclays, BNP Paribas, Credit Suisse and HSBC are physical bookrunners on the euros.

Final terms compare with guidance given at launch of E/L+375-400 with a 0% floor on the euros and 0.5% floor on the dollars, with both offered at 99.5. There is an unchanged feature of two margin step-downs on the euros and one step-down on the dollars.

The tranche split was initially outlined as €475 million and $855 million, while final terms suggest a yield of 3.89% on the euros and 4.36% on the dollars.

Goldman Sachs, Jefferies, Lloyds, Morgan Stanley, NatWest, RBC, SMBC and UniCredit make up the full mandated lead arranger group. Credit Suisse is the agent for both tranches.

Corporate ratings are B-/B2, while issue ratings are B-/B1, with a recovery rating of 3.

Cobham Ultra SeniorCo is the borrower for the euro tranche, and Cobham Ultra US Co-borrower is the borrower for the dollars.

Ultra Electronics is a U.K.-based company that serves the defense, security, critical detection and control markets. Advent, through Cobham, confirmed the deal to buy Ultra Electronics on Aug. 16 in an acquisition that valued the London-listed group at £2.57 billion. The deal comes with commitments designed to allay potential government fears over national security and is subject to a public interest intervention notice issued by the U.K.'s secretary of state for business. This means the Competition and Markets Authority must complete and submit a report on the takeover by midnight London time on Jan. 18, 2022.

Advent agreed to buy Cobham in 2019, in a deal backed by a cross-border first- and second-lien loan financing that was allocated in January 2020. That financing included an €885 million term loan B priced at E+375 and a $1.188 billion TLB at L+350 with a 1% floor. There was also a £532 million-equivalent, dollar-denominated eight-year second-lien facility.