Magna International gets $1.4 billion delayed-draw loan to buy Veoneer

By William Gullotti

Buffalo, N.Y., March 7 – Magna International Inc. entered into a new $1.4 billion delayed-draw term loan agreement on March 6 with Bank of Nova Scotia as administrative agent for the purpose of partially financing its Dec. 19 agreement to acquire the Veoneer Active Safety business, according to a 6-K filing with the Securities and Exchange Commission.

The unsecured term loans are divided into two parts, $800 million with a three-year tenor and $600 million with a five-year tenor. Borrowings from either term loan are subject to a minimum amount of $5 million, increasable in increments of $1 million.

Drawdowns will bear SOFR-based interest with margins based on the company’s credit ratings, but the pricing grid for each term loan was redacted in the filing. The interest floor was likewise redacted.

In addition to serving as administrative agent, Scotia is also acting as a joint lead arranger and joint bookrunner along with Bank of America, NA, Canada Branch, Export Development Canada, BNP Paribas Securities Corp. and Citibank NA, Canada Branch.

JPMorgan Chase Bank, NA, Toronto Branch, Royal Bank of Canada and Toronto-Dominion Bank are the senior managing agents.

BofA, Canada Branch is also the syndication agent.

Export Development, BNP Paribas and Citibank Canada are also the documentation agents.

The Veoneer acquisition is for $1.525 billion in cash, subject to working capital and other customary purchase price adjustments. The transaction is expected to close near mid-year 2023, subject to some regulatory approvals and other customary closing conditions. Magna will supplement financing for the acquisition itself and associated costs via further debt offerings, draws from other available credit facilities and through the issuance of commercial paper.

Magna International is an Aurora, Ont.-based automotive supplier. Veoneer is a Stockholm, Sweden-based automotive safety electronics developer and manufacturer.

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