Western Digital obtains $2.3 billion term loan, $500 million revolver

By Marisa Wong

Madison, Wis., March 9 - Western Digital Corp. and its subsidiaries, Western Digital Ireland, Ltd. and Western Digital Technologies, Inc., entered into a credit agreement on March 8 for $2.8 billion of unsecured loan facilities.

The facilities consist of a $2.3 billion term loan and a $500 million revolving credit facility. The revolver will be available to both Western Digital subsidiaries, but Western Digital Ireland will be the sole borrower under the term loan.

The revolver includes a $50 million sublimit for letters of credit and a $20 million sublimit for swingline loans.

There is a $500 million accordion feature for the credit facilities.

The $2.3 billion term loan and $500 million revolver were borrowed on the closing date and were used to finance a portion of Western Digital's previously announced acquisition of a Hitachi Ltd. subsidiary and to refinance the existing term loans of Western Digital Technologies.

Remaining revolving loans may be used by the Western Digital subsidiaries from time to time for working capital, capital expenditures and other corporate purposes, including permitted acquisitions.

Interest is equal to Libor plus 150 basis points to 250 bps, depending on the consolidated leverage ratio of the company and its subsidiaries.

There is a facility fee for the revolver ranging from 25 bps to 50 bps, also depending on the consolidated leverage ratio, as well as letter-of-credit fees.

In addition, the credit facility requires the company to comply with a leverage ratio and an interest coverage ratio calculated on a consolidated basis for the company and its subsidiaries. The facility also contains customary covenants and certain events of default.

Beginning on March 30, Western Digital Ireland is required to make regular quarterly principal payments of $57.5 million under the term loan.

Western Digital Technologies terminated its existing credit agreement dated Feb. 11, 2008 with JPMorgan Chase Bank, NA as administrative agent upon closing of the new facility.

Bank of America, NA is the administrative agent, swingline lender and letter-of-credit issuer for the new facility.

Western Digital is an Irvine, Calif.-based designer and producer of hard drives and solid state drives.

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