In a process of refinancing the debt structure, L-3 Communications Holdings Inc.’s (LLL) wholly owned subsidiary, L-3 Communications Corporation, issued Senior Notes worth $800 million followed by full redemption of its outstanding $800 million Senior Subordinated Notes. Out of the outstanding $800 million, $400 million 6.125% Senior Subordinated Notes are due in 2013 (2013 Notes) and another $400 million 6.125% Senior Subordinated Notes are due in 2014 (2014 Notes).
 
The Notice of Redemption of 2013 Notes and 2014 Notes was sent to the registered holders on May 12, 2010. The Bank of New York, Mellon, is appointed as the paying agent for both these Notes.
 
L-3 Communications Corporation will redeem the 2014 Notes on June 21, 2010, at a redemption price of 102.042% of the principal amount thereof, plus accrued and unpaid interest up to June 21, 2010. The interest on the 2014 Notes will cease to accrue on and after June 21, 2010.  
 
The company will redeem the 2013 Notes on July 15, 2010, at a redemption price of 101.021% of the principal amount thereof, plus accrued and unpaid interest up to July 15, 2010. The interest on the 2013 Notes will cease to accrue on and after July15, 2010.  
 
As a result of the redemption, the company will record a debt retirement charge of $18 million, out of which $13 million will be recorded in the second quarter of 2010 and $5 million will be recorded in the third quarter of 2010. The after-tax impact of charges will be $11 million out of which $8 million (7 cents per share) will be recorded in the second quarter and $3 million (2 cents per share) will be recorded in the third quarter.   
 
On May 18, 2010, L-3 Communications Corporation issued $800 million of 4.75% Senior Notes due on July 15, 2020. Net proceeds from the issuance will be used to redeem the Notes and the company will also use its cash in hand if required. The company has lowered its interest expense burden through refinancing its debts.
 
During the first quarter earnings call, L-3 Communications Holdings Inc. announced that it expects net sales for the full year to be in a range of $16.2 to $16.3 billion and earnings per share to be in a range of $8.13 to $8.33.
 
New York-based, L-3 Communications Holdings Inc. provides command, control, communications, intelligence, surveillance, and reconnaissance (C3ISR) systems; aircraft modernization and maintenance; and government services in the United States and internationally. L-3 Communications Holdings Inc.’s major competitors are Honeywell International Inc. (HON), Lockheed Martin Corporation (LMT) and Raytheon Co. (RTN).
 
We presently maintain a Neutral rating on the stock. We have a neutral outlook on the stock on the basis of a low backlog, loss of key contracts, and apprehensions over defense spending under the Obama Administration.
Read the full analyst report on “LLL”
Read the full analyst report on “HON”
Read the full analyst report on “LMT”
Read the full analyst report on “RTN”
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