A Credit Suisse–led arranger has scheduled a lender call for 10:45 a.m. EDT tomorrow, Oct. 30, to roll out a $2.7 billion covenant-lite B term loan backing NXP Semiconductors’ planned acquisition of Freescale Semiconductor, according to sources.
Ahead of tomorrow’s call, the arrangers are circulating guidance of L+325, with a 0.75% LIBOR floor and a 99 offer price. Lenders to the five-year loan are offered six months of 101 soft call protection.
At the proposed guidance, the loan offers a yield to maturity of about 4.3%. Note the company’s recently issued 4.125% unsecured notes due 2020 are trading in a 102.5 context, yielding just over 3.5%.
Credit Suisse, Barclays, Bank of America Merrill Lynch, Morgan Stanley, and Deutsche Bank are arranging the transaction. Commitments will be due on Thursday, Nov. 5.
As reported, the semiconductor manufacturer in early March agreed to purchase Freescale in a transaction that values the combined enterprise at just over $40 billion. Freescale shareholders will receive $6.25 in cash and 0.3521 of an NXP ordinary share for each Freescale common share held at the close of the transaction—implying a total enterprise value for Freescale of roughly $16.7 billion, including net debt.
Recall the financing commitment originally provided for a $6.5 billion TLB, but that has been whittled down to $2.7 billion. First, the issuer executed a change-of-control waiver for about $1.5 billion of bonds, and then reduced the amount by another $1 billion by placing a two-part bond deal in June. Also reducing the size of the TLB is the company’s planned $1.8 billion sale of its RF Power business to JAC Capital, sources added.
Note that with the TLB sized at $2.7 billion, the transaction represents an approximately $735 million paydown to the institutional market, since Freescale has about $3.435 billion of institutional term loans outstanding that will be refinanced. NXP’s existing institutional loans will remain in place in connection with the merger.
NXP is based in the Netherlands, but its shares trade on the Nasdaq under the ticker NXPI. The company is currently rated BB+/Ba2. — Kerry Kantin
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