Kratos talks $625 million notes to yield in 7¼% area; pricing Friday

By Paul A. Harris

Portland, Ore., May 8 - Kratos Defense & Security Solutions, Inc. talked its $625 million offering of five-year first-lien senior secured notes (expected ratings B3/B) to price at a slight discount and to yield in the 7¼% area, according to an informed source.

The books close at 1 p.m. ET on Friday, and the deal is set to price shortly thereafter.

SunTrust Robinson Humphrey Inc. is the lead bookrunner for the Rule 144A with registration rights offer.

The notes become callable after two years at par plus 75% of the coupon.

A special call provision allows the issuer to redeem 10% of the notes at 103 once during the non-call period. A change in the special call reduced the number of times that the issuer may execute it to one from two.

The San Diego-based high-tech defense contractor plans to use the proceeds to redeem its 10% secured notes due 2017.

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