NEW YORK-Telecommunications Techniques Corp., which produces testing equipment for wireless and wireline networks, has obtained a $370 million bank credit facility and hopes to raise an additional $275 million from a privately placed debt issue.
TTC is a subsidiary of Dynatech Corp., Burlington, Mass. Dynatech and TTC Merger Co. will issue the 10-year subordinated notes, after which Telecommunications Techniques will assume all repayment obligations.
Moody’s Investors Service, New York, gave the proposed note sale a speculative grade rating of B3, while according a slightly higher speculative grade rating of Ba3 to the bank credit facility.
The bank credit facility is secured by all of Dynatech’s domestic assets and 65 percent of the stock of its foreign subsidiaries.
“The B3 (note) rating reflects (among other factors) the incurrence of a substantial amount of new debt and associated reduction of financial flexibility resulting from the proposed buyout and re-capitalization led by Clayton Dubilier & Rice and management,” said M.G. Subhas, managing director, and Cyrille R. Conseil, senior analyst, for Moody’s speculative grade ratings group.
“(It also reflects) the highly competitive nature of the communications test industry where, even though relatively fragmented, select larger competitors enjoy greater financial and technical resources.”
However, the Moody’s analysts said that TTC has a broad customer base among telecommunications carriers.
They further said, “Our expectation (is) that strong worldwide demand for wireless and wireline telecommunications products and services should drive growth in the deployment (and) upgrade of networks, which require testing.”
