Avago Technologies to launch $3.75 billion credit facility Wednesday

By Sara Rosenberg

New York, June 16 – Avago Technologies Ltd. is scheduled to hold a bank meeting at 9:30 a.m. ET in New York on Wednesday to launch a $3.75 billion five-year credit facility, according to a market source.

Credit Suisse Securities (USA) LLC, Bank of America Merrill Lynch, Deutsche Bank Securities Inc., Barclays, Citigroup Global Markets Inc. and Wells Fargo Securities LLC are the bookrunners on the deal. Nomura, BMO Capital Markets Corp. and Bank of Tokyo-Mitsubishi UFJ are the co-managers.

The facility consists of a $500 million revolver and a $3.25 billion term loan A, the source said.

Pricing on the term loan A is Libor plus 150 basis points to 200 bps, subject to a ratings-based grid, the source continued.

Amortization on the term loan A is 5% in years one, two and three, 10% in year four and 75% in year five.

The debt includes a net first-lien secured leverage covenant.

Commitments are due at 5 p.m. ET on Aug. 5, the source added.

Proceeds will be used to refinance existing debt and help fund the acquisition of Broadcom Corp.

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.

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