VeriFone $540 million credit facility expected as July business

By Sara Rosenberg

New York, June 22 - VeriFone Holdings Inc. is expected to hold a bank meeting sometime in July to launch its proposed $540 million senior secured credit facility, according to a market source.

JPMorgan and Lehman Brothers are the lead banks on the deal.

The facility consists of a $40 million six-year revolver that is expected to carry pricing of Libor plus 150 basis points and a $500 million seven-year term loan B that is expected to carry pricing of Libor plus 175 bps, according to an S-4 recently filed with the Securities and Exchange Commission.

Proceeds will be used to help fund the acquisition of Lipman Electronic Engineering Ltd., a Rosh Haayin, Israel-based provider of electronic payment systems, and refinance VeriFone's existing bank debt.

Debt to EBITDA will approximate 3 times at closing.

Under the purchase agreement, Lipman shareholders will receive for each Lipman share 0.5 shares of VeriFone stock and $14.304 in cash, adjusted for a special dividend. The amount of the special dividend has not been finally determined, but will likely exceed $23 million. Alternatively, Lipman shareholders may elect to receive either $29.07 in cash, or 0.9844 shares of VeriFone stock for each Lipman share, each adjusted for the special dividend. The cash and stock elections are subject to proration such that VeriFone will issue 13.3 million shares of VeriFone stock and pay about $382 million in cash, adjusted for the special dividend.

All in all, the acquisition is valued at $793 million based on VeriFone's share price at the close of trading on April 7.

Closing is subject to VeriFone and Lipman shareholder approval, regulatory approval and other customary conditions.

Following the acquisition, San Jose, Calif.-based VeriFone will become the largest global provider of electronic payment services.

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