KLA-Tencor closes $1.25 billion five-year credit facility via JPMorgan

By Susanna Moon

Chicago, Nov. 17 – KLA-Tencor Corp. said it closed its $1.25 billion five-year senior unsecured revolving credit and term loan facility.

The facility consists of $750 million of amortizing term loans and commitments for an unfunded revolving credit facility of $500 million, according to a company press release.

Proceeds will be used, along with the proceeds from a registered offering of about $2.5 billion principal amount of its senior notes and cash on hand, to fund a special dividend to stockholders of about $2.75 billion, to redeem the $750 million outstanding principal amount of KLA-Tencor's 6.9% senior notes due 2018 (including the payment of associated redemption premiums, accrued interest and related fees and expenses) as promptly as practicable following the closing of this credit facility and for other general corporate purposes, including repurchases of shares of KLA-Tencor's common stock pursuant to KLA-Tencor's stock repurchase program.

The special dividend includes the portion of the special cash dividend that could be payable to holders of outstanding equity awards under the 2004 equity incentive plan.

JPMorgan Chase Bank, NA is the administrative agent.

Credit agreement plans

The company said on Oct. 30 that it planned to enter into a credit agreement with JPMorgan Chase Bank, NA as administrative agent that will fund, along with cash on hand, a roughly $2.75 billion special dividend to the company’s stockholders.

The credit agreement will consist of a commitment for amortizing term loans and a revolving credit facility, according to a previous 424B5 filing with the Securities and Exchange Commission, which did not state the size of the loans.

Interest will be Libor plus 100 basis points to 175 bps, depending on credit ratings.

The commitment fee will range from 10 bps to 25 bps.

The filing added that the company will be required to maintain a maximum leverage ratio of 4.5 to 1.0, stepping down over 10 quarters to a maximum of 3.0 to 1.0, and a minimum interest coverage ratio of 3.5 to 1.0.

The Milpitas, Calif.-based company is a supplier of process control and yield management services for the semiconductor and related nanoelectronics industries.

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