Western Digital reworks U.S. and euro term loan B and term A sizes

By Sara Rosenberg

New York, March 30 – Western Digital Corp. downsized its U.S. seven-year covenant-light term loan B to $3.75 billion from $4.2 billion, upsized its euro-denominated seven-year covenant-light term loan B to $1 billion-equivalent from $550 million-equivalent and upsized its five-year term loan A to $4,125,000,000 from $3.75 billion, according to a market source.

The company’s now $9,875,000,000 credit facility, up from $9.5 billion, also includes a $1 billion five-year revolver.

Pricing on the U.S. term loan B is Libor plus 550 basis points with a 0.75% Libor floor and an original issue discount of 97, and pricing on the euro term loan B is Euribor plus 525 bps with a 0.75% floor and an original issue discount of 97.5.

Earlier in syndication, the spread on the U.S. and euro term loan B’s increased from talk of Libor/Euribor plus 450 bps to 475 bps, and the discounts on the tranches widened from 98.5.

The B loans have 101 soft call protection for one year.

J.P. Morgan Securities LLC, Bank of America Merrill Lynch, Credit Suisse Securities (USA) LLC, RBC Capital Markets LLC, HSBC Securities (USA) Inc., MUFG and Mizuho are the leads on the debt.

Proceeds will be used to help fund the acquisition of SanDisk Corp. and refinance existing debt at both companies.

Other funds for the transaction are expected to come from Western Digital stock, $1,875,000,000 of senior secured notes that were upsized from $1.5 billion and $3.35 billion of senior unsecured notes that were downsized from $4.1 billion.

Under the agreement, SanDisk is being bought for $78.80 per share for a total equity value of about $17 billion. Assuming no closing cash shortfall, Western Digital will pay $67.50 in cash and 0.2387 of a share of Western Digital common stock per share of SanDisk common stock.

Closing is expected in the second quarter, subject to regulatory approval in China and other customary conditions.

Western Digital is an Irvine, Calif.-based developer and manufacturer of storage solutions that enable people to create, manage, experience and preserve digital content. SanDisk is a Milpitas, Calif.-based provider of flash storage solutions.

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