Drunk on Booz debt?

2 December 2009 By Lauren Silva

Carlyleowned consultancy Booz Allen is taking out a loan to pay the buyout firm a $550 mln dividend. It is the sixth company this year to recapitalize this way. Even with the new debt, Booz won’t be overleveraged. Still, given recent blowups, investors should be cautious.

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Booz Allen is launching a $350 million term loan to help fund a $550 million dividend payment to Carlyle Group, the private equity firm that controls it. The company will also use a portion of its $425 million cash on hand to fund the deal, according to Standard & Poor's Leveraged Commentary and Data.

Credit Suisse and Bank of America Merrill Lynch are arranging the loan. Six companies have announced leveraged recaps this year, according to S&P LCD.

Carlyle bought a majority interest in the U.S. government consulting business of Booz in May 2008 for $2.5 billion. Booz officers own the rest of the stock.

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