L-3 board OKs share distribution of spinoff Engility

The board of directors of L-3 Communications Holdings Inc. has approved the distribution to its shareholders of all outstanding shares of its subsidiary, Engility Holdings, Inc., further advancing completion of the spin-off.

Each L-3 shareholder of record as of July 16, 2012, will receive on July 17 one share of Engility for every six shares of L-3 common stock held as of the record date, according to a June 27 company announcement.

L-3 announced its plans to divest the government systems engineering and technical services provider in July 2011. The new company will be located in offices currently occupied by L-3 Communications in Chantilly, Va., and will employ 9,200 worldwide.

In connection with the spin-off, Engility will retain approximately $10 million in 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.

L-3 expects to receive net proceeds of $325 million after expenses and cash retained by Engility, the announcement said.

“The board’s actions reflect the culmination of a thorough strategic evaluation of the company’s businesses. 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,” said Michael Strianese, L-3’s chairman, president and chief executive officer, said in the announcement. “Additionally, L-3 will benefit from an enhanced focus on value-added solutions and its market-leading products and systems.”

L-3 Communications Corp., of New York, N.Y., ranks No. 12 on Washington Technology’s 2012 Top 100 list of the largest federal government contractors.