Group Buying TRW Data Unit to Sell Bonds

The investment group buying TRW Inc.’s information services unit wants to sell $300 million worth of bonds to help defray the $1.1-billion purchase price, according to documents filed with the Securities and Exchange Commission.

The registration statement filed June 17 says the investment group, led by Boston investment firms Bain Capital Inc. and Thomas H. Lee Co., expects to complete the financing by borrowing an additional $510 million and making a $255-million cash infusion.

The information services unit, which includes TRW’s consumer and business credit reporting services, its TRW-Redi real estate data subsidiary and several marketing information businesses, is one of the largest credit information businesses in the United States, with about 25% of the total market.

Terms of the acquisition require the investors to change the company name within two years, removing the widely known TRW name from the credit information market. TRW Information Systems maintains credit records on 190 million people and 25 million businesses.

But analysts say the pending name change should not cost the company much business because there are few competitors--only two other nationwide companies provide consumer creditor reports--and because the new company will be able to advertise itself as the former TRW Information unit for a full year after changing its name.

For 1995, according to the SEC filing, the unit had $540.2 million in sales and a $51.8-million profit. For the first quarter this year, revenue neared $144 million, up 7.5% from a year earlier, while profit totaled $12.4 million, down 6%. Industry analysts estimate that consumer and business credit information is a $2.2-billion market in the U.S.

D. Van Skilling, general manager of Orange-based TRW Information Systems and Services, has said he expects the sale to the Bain-Lee investment group to close in the third quarter and that the name change could occur at the same time.

For purposes of the public bond offering, the investors have formed a new company called IntelliData Inc., but officials at Thomas H. Lee and TRW have said that will not be the new name for TRW Information Systems.

Skilling, a 27-year veteran at TRW, will be chief executive of the new company, and he and several other TRW Information managers are investing in it, the SEC filing shows. Their exact stakes are not spelled out.

According to the filing, Skilling was paid more than $1 million last year and holds TRW stock options worth more than $2.6 million--likely the basis of his investment in the new company.

The filing for the proposed bond offering, which could be held sometime next month if the SEC acts quickly to approve the registration statement, says the bonds would mature in 10 years and that the investors could start buying them back after five years.

Bain and Lee typically invest in companies with growth potential, pump up their businesses and then sell them at a tidy profit. Lee, for instance, made a profit of nearly $850 million in 1994 from the sale of Snapple Beverage Co. to Quaker Oats Co. Lee purchased a $28-million interest in Snapple in 1992 and sold it for $872 million.

Skilling has said he expects the investment group to take the investment services company public in the future.