Microsemi restructured deal frees to trade; Endurance International offer side softens

By Sara Rosenberg

New York, Dec. 17 – Microsemi Corp.’s credit facility made its way into the secondary market on Thursday with revised tranche sizes, wider spread and original issue discount on the term loan B and revolver and term loan A pricing firming at the high end of guidance.

Also in trading, Endurance International Group Holdings Inc.’s term loan saw levels tighten as the offer side moved lower following news that the company is being investigated by the Securities and Exchange Commission.

Microsemi hits secondary

Microsemi’s credit facility broke for trading on Thursday, with the $1.7 billion seven-year covenant-light term loan B quoted at 98 bid, 98½ offered, according to a trader.

Pricing on the term loan B is Libor plus 450 basis points with a 0.75% Libor floor, and it was sold at an original issue discount of 97. The debt has 101 soft call protection for one year.

The company’s $2.45 billion senior secured credit facility (Ba3/BB-) also includes a $450 million five-year term loan A and a $300 million five-year revolver, both priced at Libor plus 250 bps with no floor.

During syndication, the term loan B was upsized from $1,425,000,000, pricing was raised from talk of Libor plus 375 bps to 400 bps, the discount was changed from guidance of 98 to 98.5, and the call protection was extended from six months, a source said.

Also, in syndication, the term loan A was downsized from $650 million, the revolver was cut from $350 million, and pricing on these tranches finalized at the high end of the Libor plus 225 bps to 250 bps talk, the source continued.

Microsemi buying PMC

Proceeds from Microsemi’s credit facility will be used with cash on hand and common stock to fund the acquisition of PMC-Sierra Inc. and refinance existing debt.

The $25 million increase to the total amount of funded bank debt will be used to pay for the wider original issue discount, the source added.

Under the agreement, PMC shareholders will receive $9.22 in cash and 0.0771 of a share of Microsemi common stock for each share of PMC common stock through an exchange offer. The transaction is valued at about $2.5 billion.

Morgan Stanley Senior Funding Inc., the Bank of Tokyo-Mitsubishi UFJ Ltd. and Deutsche Bank Securities Inc. are leading the credit facility.

Closing is expected in mid-January, subject to regulatory approvals, the tender of at least a majority of the outstanding shares of PMC’s common stock and customary conditions.

Aliso Viejo, Calif.-based Microsemi and Sunnyvale, Calif.-based PMC are semiconductor companies.

Endurance offered lower

In more happenings, Endurance International’s term loan moved to 97 bid, 97 7/8 offered from 97 bid, 98½ offered after the company disclosed in a filing with the Securities and Exchange Commission that it is under investigation, a trader said.

The company said it received a subpoena dated Dec. 10 from the Boston Regional Office of the SEC requiring the production of certain documents, including, among other things, documents related to its financial reporting, refund, sales and marketing practices and transactions with related parties.

The filing added that the company can make no assurances as to the time or resources that will need to be devoted to this investigation or its final outcome, or the impact, if any, of this investigation on its business, financial condition, results of operations and cash flows.

Endurance is a Burlington, Mass.-based provider of web hosting and online services.

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