BAE to refinance $2bn as part of GPS acquisition funding

Typhoon jets

BAE Systems is raising $2bn to refinance a bridging loan put in place in January.

The money was originally used to fund the $1.9bn acquisition of the Collins Aerospace Military Global Positioning System business. The deal was announced in January and completed in July.

The GPS business is a key provider on the two highest volume weapons programmes for the US Air-Force.

BAE Systems’ chief executive Charles Woodburn, speaking at the time, said the acquisition was “focused on areas of highest priority defence spending [and] will further enhance the group’s opportunity for continued growth in electronic systems.”

The $2bn bond issue is made up of two tranches. $1bn will pay 1.9% and mature in 2031 while the remaining $1bn will pay 3% until it matures in 2050.

The offering is to to qualified institutional buyers and is expected to close next Tuesday.