Exelis [XLS] Sept. 8 said the planned spin-off of its Mission Systems business will occur on Sept. 27 with the new company set to begin trading on the New York Stock Exchange as Vectrus [VEC] on Sept. 29.
Exelis said that Vectrus will incur about $140 million in debt financing as part of the spin-off, which will be used to fund an approximately $120 million cash distribution to Exelis. Exelis said it will be paid an additional sum following the cash distribution through a working capital adjustment.
Exelis also said that under the spin-off about 10 million shares of Vectrus common stock will be distributed to Exelis shareholders.
“The decision to create two well capitalized companies underscores Exelis’ commitment to ensuring that our strategic priorities are aligned with the best interests of our shareholders,” David Melcher, president and CEO of Exelis, said in a statement. “Each company will have a solid strategy and strong leadership and be better equipped to serve the needs of its global customers.”
Exelis announced the planned spin-off last December to enable it to focus on its strategic growth platforms of critical networks, ISR and analytics, electronic warfare, and aerostructures. At that time the new company was expected to begin with about $1.5 billion in annual sales but given declining United States military activity in Afghanistan and the Middle East later lowered that forecast to between $1.2 billion and $1.3 billion.
Vectrus, which will be based in Colorado Springs, Colo., will provide a variety of services to government customers, including infrastructure asset management, information technology and network communication, and logistics and supply chain management. The company will have nearly 7,000 employees and operate in more than 100 locations in 18 countries.
On Sept. 19 Exelis will host an investor session to provide analysts and shareholders with a financial overview of Vectrus. The session will include Ken Hunzeker, who will be CEO of Vectrus, Ted Wright, the company’s future chief operating officer, and Matthew Klein, future chief financial officer of Vectrus.
Exelis also announced other senior management officials for Vectrus, including Michel Tyler, senior vice president, chief legal officer and corporate secretary, Francis Peloso, senor vice president and chief human resources officer, Janet Oliver, senior vice president for Business Development, Kelvin Koppock, senior vice president for Contracts, and Charles Anderson, senior vice president for Programs.
In addition to Hunzeker, Vectrus’ board will include Louis Giuliano as non-executive chairman, Bradford Boston, Mary Howell, William Murdy, Melvin Parker, Eric Pillmore, Stephen Waechter, and Phillip Widman.