Avago Technologies plans $5.1 billion facility with LSI purchase

By Sara Rosenberg

New York, Dec. 16 - Avago Technologies Ltd. expects to get a $5.1 billion credit facility to help fund its acquisition of LSI Corp., according to an 8-K filed with the Securities and Exchange Commission on Monday.

The facility consists of a $500 million undrawn revolver and a $4.6 billion seven-year term loan.

The term loan would have a roughly 3.5% blended interest rate today, the filing said.

Also, the credit facility would allow for the company to pay dividends.

Other funds for the acquisition will come from $1 billion of cash and a $1 billion investment by Silver Lake Partners in the form of 2% unsecured notes convertible at $48.04 per share or preferred stock.

Under the agreement, LSI is being bought for $11.15 per share in an all-cash transaction valued at $6.6 billion.

Gross debt to EBITDA will be 3.8 times, net debt to EBITDA will be 3.3 times, and EBITDA to interest will be 7.3 times.

Closing is expected in the first half of 2014, subject to regulatory approvals in various jurisdictions, LSI stockholder approval and customary conditions.

Avago is a Singapore-based designer, developer and supplier of analog semiconductor devices. LSI is a San Jose, Calif.-based designer of semiconductors and software that accelerate storage and networking in datacenters, mobile networks and client computing.

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