Textron Inc., the manufacturer of Cessna aircraft, is seeking to borrow $1.1 billion to support its acquisition of Beech Holdings LLC, the parent of planemaker Beechcraft Corp.
JPMorgan Chase & Co. is providing the financing, the Providence, Rhode Island-based company said in a statement distributed yesterday by Business Wire. About half of the financing will come as a five-year, pre-payable bank loan, Chairman and Chief Executive Officer Scott Donnelly said on a teleconference today with analysts and investors. The remainder will be financed with a bond, and the combined debt will have an interest rate of about 3.75 percent.
Textron is buying all outstanding equity interests in Beech, formerly Hawker Beechcraft Inc., in a transaction valued at $1.4 billion, according to the statement. The deal is expected to close in the first half of next year.
“The transaction does not affect our ‘satisfactory’ business risk assessment on Textron,” Standard & Poor’s analyst Sol Samson wrote in a report today. “Textron’s credit metrics will remain comparable to its historical and previously expected debt measures, since the company has managed to substantially reduce debt and retire obligations recently.”
Textron has about $3.45 billion of debt outstanding, according to data compiled by Bloomberg.
S&P has a BBB- grade on the company, with a “stable” outlook. Moody’s Investors Service affirmed its Baa3 rating on Textron. The grade is supported by the company’s “large scale and revenue diversification,” Moody’s analysts led by Russell Solomon wrote in a report today.
David Sylvestre, a spokesman for Textron, couldn’t immediately comment on the financing for the transaction.
Hawker Beechcraft, the Wichita, Kansas-based designer and maker of light- and medium-sized jets, filed for Chapter 11 reorganization in May 2012.
Beechcraft is controlled by its former creditors. Centerbridge Partners LP, Sankaty Advisors LLC and Angelo, Gordon & Co. are among the funds that own a combined stake of about 90 percent and took control following the bankruptcy, according to the company. Before bankruptcy, Hawker Beechcraft was owned by Goldman Sachs Group Inc. and Onex Corp.