Avago Technologies plans $16 billion credit facility with Broadcom buy

By Sara Rosenberg

New York, May 28 – Avago Technologies Ltd. expects to get a $16 billion credit facility in connection with its acquisition of Broadcom Corp., company officials said in a conference call on Thursday.

The facility consists of a $500 million revolver, which will be undrawn at closing, and $15.5 billion of new term loans.

Of the total term loan amount, $6.5 billion will be used to refinance existing debt facilities and $9 billion is new debt that will be used with cash on hand to fund the Broadcom purchase, officials remarked.

The loans are expected to have limited financial covenants and allow for dividends and share repurchases.

Pro forma gross debt will be 2.7 times and net debt will be 2.5 times, with $750 million of synergies.

Under the agreement, Avago will acquire Broadcom for $17 billion in cash consideration and the economic equivalent of about 140 million Avago ordinary shares, valued at $20 billion as of May 27. Broadcom shareholders will own around 32% of the combined company.

Closing is expected in the first quarter of 2016, subject to regulatory approvals in various jurisdictions, and the approval of Avago’s and Broadcom’s shareholders.

Avago is a designer, developer and supplier of analog semiconductor devices with headquarters in Singapore and San Jose, Calif. Broadcom is an Irvine, Calif.-based provider of semiconductor solutions for wired and wireless communications.

The combined company will adopt the name Broadcom Ltd.

© 2015 Prospect News.
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