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ON Semiconductor plans $2.7 billion credit facility with Fairchild buy
By Sara Rosenberg
New York, Nov. 18 – ON Semiconductor Corp. has received a commitment for a $2.7 billion senior secured credit facility to help fund its acquisition of Fairchild Semiconductor International Inc., according to an 8-K filed with the Securities and Exchange Commission on Wednesday.
Deutsche Bank Securities Inc. and Bank of America Merrill Lynch are the joint lead arrangers and joint bookrunners on the deal.
The facility consists of a $300 million five-year revolver and a $2.4 billion seven-year covenant-light term loan B.
Revolver pricing is expected at Libor plus 300 basis points, with two 25 bps step-downs based on leverage, a 35 bps commitment fee and a 25 bps upfront fee.
Pricing on the term loan B is expected at Libor plus 350 bps with a 0.75% Libor floor and an original issue discount of 99, and the debt is anticipated to have 101 soft call protection for six months.
Amortization on the term loan B is 1% per annum.
The revolver may be increased by an additional $200 million.
Under the agreement, Fairchild is being bought for $20.00 per share in an all cash transaction valued at about $2.4 billion.
The term loan B, along with cash on hand, will fund the purchase price and refinancing of $200 million of existing Fairchild debt facilities, and the revolver will be undrawn and available for general corporate purposes.
ON Semiconductor’s existing debt of $1.5 billion will not be refinanced as part of transaction.
Total leverage is 3.7 times and net leverage is 3.2 times, with $150 million of synergies.
The company is aiming to quickly delever and is targeting a net leverage ratio of 2 times within two years of closing.
Closing is expected late in the second quarter of 2016.
ON Semiconductor is a Phoenix-based semiconductor company. Fairchild Semiconductor is a San Jose, Calif.-based semiconductor company.
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