Zebra gets commitment for $2.25 billion senior secured facilities, $1.25 billion bridge loan

By Marisa Wong

Madison, Wis., April 16 - Zebra Technologies Corp. entered into a financing commitment letter on April 14 with Morgan Stanley Senior Funding, Inc. to fund up to $2 billion under a new seven-year senior secured term loan facility and up to $250 million under a new five-year senior secured revolving credit facility, according to an 8-K filing with the Securities and Exchange Commission.

The funds will be used, along with cash on hand, to finance Zebra's acquisition of Motorola Solutions, Inc.'s enterprise business.

The commitment letter also covers a bridge loan of up to $1.25 billion, less the proceeds from an issue of new senior notes and less the proceeds from an issue of mandatory convertible preferred stock. The company is planning an up to $1.25 billion Rule144A offering of notes and expects to receive net proceeds of up to $400 million from the mandatory convertible preferreds.

The term loan and revolving facilities also entitle the company to incur additional term loans or increase revolving commitments by up to $300 million.

Interest for the revolver is initially adjusted Libor plus 250 basis points. Once the borrower delivers financial statements for the first full fiscal quarter after the transaction closes, interest will be adjusted Libor plus 225 bps to 275 bps, depending on the company's consolidated total secured net leverage ratio.

The term loan bears interest at adjusted Libor plus 300 bps.

Commitment fees range from 25 bps to 50 bps, also based on the company's consolidated total secured net leverage ratio once financial statements are delivered for the first full fiscal quarter after the closing date.

The interest rate for the bridge loan for the first three months after closing will be adjusted Libor plus 525 bps, subject to a 1% Libor floor. After that, the margin will step up by 50 bps each quarter.

One year after the closing date, the bridge loan will be automatically converted into a senior unsecured term loan due eight years after the closing date.

At any time after this conversion date, the extended term loans may be exchanged in whole or in part for senior unsecured exchange notes, subject to a $50 million minimum total principal amount.

Lincolnshire, Ill.-based Zebra provides marking and printing technologies. Motorola is a communications technology company based in Schaumburg, Ill.

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