Cobham Plc, the U.K. maker of military equipment, obtained a $1.3 billion short-term loan to finance its proposed acquisition of Aeroflex Holding Corp.
Bank of America Corp. and Royal Bank of Scotland Group Plc are arranging the one-year bridge facility, which includes two one-year extension options, the Wimborne, England-based company said in a statement. The loan will also help refinance Aeroflex’s $540 million of net debt.
Cobham is seeking to reduce its reliance on military spending that’s being eroded by government budget cuts. The $895 million cash offer for Aeroflex, which makes circuits used in wireless and broadband communications, would boost the proportion of revenue Cobham receives from civil products, the company said in the statement.
The terms and conditions of the bridge loan are similar to Cobham’s existing $360 million revolving credit facility, according to the statement. Plainview, New York-based Aeroflex has about $670 million of loans expiring in 2017 and 2019, according to data compiled by Bloomberg.
Cobham said it’s also selling about 65 million ordinary shares, representing about 6 percent of its current share capital, to help fund the acquisition.