Freescale seeks noteholder consent to skip change-of-control offer

By Angela McDaniels

Tacoma, Wash., March 23 – Freescale Semiconductor, Ltd. indirect subsidiary Freescale Semiconductor, Inc. began a consent solicitation for its $500 million of dollar-denominated 5% senior secured notes due 2021 and $960 million of dollar-denominated 6% senior secured notes due 2022, according to a company news release.

The issuer is undertaking the consent solicitations at the request and expense of NXP Semiconductors NV, which has agreed to acquire Freescale. The consent solicitations are not a condition to the completion of the merger. If the required consents are not received, NXP and Freescale will merge using a different structure.

The company is asking noteholders to approve amendments to, and to waive some provisions of, the indentures governing the notes.

The proposed waivers would, among other things, waive the noteholders’ right to require the issuer to repurchase their notes as a result of the change of control resulting from the merger.

The proposed amendments would align the restricted group subject to the covenants in the indentures governing the notes with the restricted group subject to the covenants in the indentures governing NXP’s notes and align some other indenture provisions with the terms of the indentures governing NXP’s notes.

Freescale said the effect of the proposed amendments, together with the guarantee to be provided by NXP if the merger is consummated, would include Freescale becoming significantly less leveraged following the merger than it currently is on a standalone basis and the notes receiving the benefit of existing NXP collateral.

The consent deadline is 5 p.m. ET on April 2.

Holders who consent will receive $5.00 per $1,000 principal amount of notes. The cash payment will be made by NXP shortly prior to the completion of the merger.

In order to adopt the proposed amendments and the proposed waivers for a series of notes, consents are needed from the holders of at least two-thirds of the principal amount outstanding of that series of notes.

The consent solicitation for the 5% notes is independent of the consent solicitation for the 6% notes and vice versa.

The proposed amendments will be effective once enough consents are received, but they will be operative only once the merger has been completed.

The lead solicitation agent is Credit Suisse Securities (USA) LLC (800 820-1653 or 212 325-2476). Barclays Capital Inc., BofA Merrill Lynch, Deutsche Bank Securities Inc. and Morgan Stanley & Co. LLC are additional solicitation agents. The information agent is D.F. King & Co., Inc. (212 269-5550, 800 499-8519 or fsl@dfking.com).

Freescale and NXP are semiconductor makers based in Austin, Texas, and Eindhoven, the Netherlands, respectively.

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