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. 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 B due 2025, to

...+ 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. + 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, we expect it...

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