KBR, a provider of differentiated professional services and technologies to the government services and hydrocarbons sectors, entered into a new $2.15 billion senior secured credit facility.
Bank of America, BNP Paribas Securities, Citigroup Global Markets, MUFG Bank, The Bank of Nova Scotia, SunTrust Robinson Humphrey and BBVA Securities acted as joint lead arrangers on the transaction.
The facility includes a $500 million senior secured revolving line of credit, a $500 million performance letter of credit facility and a $350 million senior secured delayed draw term loan A, all maturing in April 2023, along with an $800 million senior secured term loan B maturing in April 2025.
KBR expects its gross debt to EBITDA leverage ratio to be approximately 3.0x after funding of the new facility and expects to resume a lowering of this ratio over time as has recently been the case with a combination of profit growth, cash generation and debt reductions.
Proceeds will be used to fund recent M&A and project requirements and to permanently finance existing revolver borrowings.
KBR will use a portion of this financing to acquire Stinger Ghaffarian Technologies. Additionally, the term loan A will be used to fund KBR’s loan to the JKC joint venture in order to complete the combined cycle power plant on the Ichthys project.
The facilities extend KBR’s maturities, provide capital to fuel investments for growth and provide for a ring-fencing for capital required for the Ichthys project to clarify visibility of anticipated outflows and inflows.
“Our successful strategy to build a greater base of recurring, low capital intensity services contracts across our portfolio, coupled with other de-risking actions has provided a more predictable stream of cash flows enabling us to tap into the debt markets at this time,” said KBR President and CEO Stuart Bradie.