L-3 Communications Holdings Inc. [LLL] on Tuesday said its board of directors approved the distribution to its shareholders of all the outstanding shares of its subsidiary, Engility Holdings Inc., and set the distribution ratio, record date and distribution date for the spin-off.
Each L-3 shareholder of record as of July 16, 2012, the record date for the distribution, will receive on July 17, 2012, the distribution date, one share of Engility for every six shares of L-3 common stock held as of the record date, the company said in a statement.
“The Board’s actions reflect the culmination of a thorough strategic evaluation of the company’s businesses,” said Michael Strianese, L-3’s chairman, president and CEO. “We believe that the spin-off of Engility is in the best interests of our company and shareholders. Engility will now be able to pursue new business opportunities unconstrained by organizational conflict of interest regulations and operate in a more cost-competitive manner. Additionally, L-3 will benefit from an enhanced focus on value-added solutions and its market-leading products and systems.”
In connection with the spin-off, Engility will retain approximately $10 million of cash on its balance sheet and incur approximately $345 million of debt financing. The proceeds of the debt financing will be used to pay a $335 million dividend to L-3 and to fund a portion of the transaction expenses.