Peraton sets price talk for $2.145B term loan for acquisition, refinancing

Peraton Corp. has launched its $2.145 billion first-lien term loan that is part of the financing for the company’s acquisition of the federal IT and mission support services business of Northrop Grumman, according to sources. Commitments to the J.P. Morgan-led deal are due at 5 p.m. ET on Feb. 22.

Price talk for the seven-year covenant-lite TLB is L+400-425 with a 0.75% Libor floor and an issue price of 99. That indicates a yield to maturity of roughly 5.02%-5.28%. Lenders are offered six months of 101 soft call protection.

KKR Capital Markets, Barclays, Goldman Sachs, UBS, Macquarie, and RBC Capital Markets are joint lead arrangers on the deal.

Proceeds will be used for the acquisition of the federal IT and mission support services business of Northrop Grumman, dubbed Dutchman, and to refinance existing Peraton debt, which includes a term loan B due April 2024 that is priced at L+525 with a 1% floor. Veritas Capital announced on Feb. 1 that it completed the acquisition of the business for $3.4 billion, which is being combined with existing portfolio company Peraton. The combined company is a government mission capability integrator and IT provider focused on delivering technology-enabled services and support to a broad range of critical government missions.

Additional financing includes an $855 million eight-year second-lien term loan and a $300 million five-year revolver.

First-lien facility ratings are B/B1, with a 3 recovery rating from S&P Global Ratings. Corporate ratings are B/B2, 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 separately announced Jan. 27 that it reached an agreement to acquire Perspecta in a deal valued at $7.1 billion.