Airborne Systems Said to Set Rate on $130 Million Dividend Loan

Airborne Systems Group Ltd., a parachute maker, set the interest rate it will pay on a $130 million term loan it’s seeking to fund a dividend, according to a person with knowledge of the transaction.

The five-year debt will pay interest at 5.5 percentage points more than the London interbank offered rate, said the person, who asked not to be identified because the terms are private. Libor, a rate banks say they can borrow in dollars from each other, will have a 1.25 percent floor.

Airborne is proposing to sell the loan at 98 cents to 98.5 cents on the dollar, the person said, reducing proceeds for the company and boosting the yield to investors.

Proceeds will be used to support a $49 million dividend to Metalmark Capital LLC, according to the person. Leverage, or debt to earnings before interest, taxes, depreciation and amortization, is expected to be about 4 times, the person said.

SunTrust Banks Inc. (STI) is arranging the financing for the Pennsauken, New Jersey-based company, which is also seeking a $25 million revolving line of credit, according to data compiled by Bloomberg.

Vanessa Adler, a spokeswoman for Metalmark, didn’t immediately respond to an e-mail seeking comment.

In a revolving credit facility, money can be borrowed again once it’s repaid; in a term loan, it can’t.

To contact the reporter on this story: Michael Amato in New York at Mamato3@bloomberg.net

To contact the editor responsible for this story: Faris Khan at fkhan33@bloomberg.net