Research Update: Science Applications International Corp. Upgraded To 'BB+' On Close Of Its Acquisition Of Engility; Outlook Stable

On Jan. 14, 2019, Reston, Va.-based government services and information technology (IT) provider Science Applications International Corp. (SAIC) closed on its all-stock acquisition of Engility for approximately $2.5 billion, including the assumption of approximately $950 million of Engility's debt, which the company refinanced with the proceeds from a new term loan. The transaction will result in pro forma debt to EBITDA increasing to over 4x. On Jan. 15, 2019, we raised our issuer credit rating on SAIC to 'BB+' from 'BB' and removed the ratings from CreditWatch. At the same time, we raised our issue-level rating on the company's first-lien credit facility, which consists of a $400 million revolver, $1.068 billion term loan A due 2023, and $1.05 term loan

...+ On Jan. 14, 2019, Reston, Va.-based government services and information technology (IT) provider Science Applications International Corp. (SAIC) closed on its all-stock acquisition of Engility for approximately $2.5 billion, including the assumption of approximately $950 million of Engility's debt, which the company refinanced with the proceeds from a new term loan. The transaction will result in pro forma debt to EBITDA increasing to over 4x. + On Jan. 15, 2019, we raised our issuer credit rating on SAIC to '##+' from '##' and removed the ratings from CreditWatch. + At the same time, we raised our issue-level rating on the company's first-lien credit facility, which consists of a $400 million revolver, $1.068 billion term loan A due 2023, and $1.05 term loan B due 2025, to '##+' from '##'. The '3' recovery rating is unchanged. + The stable outlook reflects our expectation that although pro forma debt leverage will rise in fiscal year ending Jan. 31, 2019 due to the acquisition of Engility,...

Research Update