Hewlett Packard Enterprise unit enters $2 billion term loan agreement

By Wendy Van Sickle

Columbus, Ohio, Dec. 22 – Hewlett Packard Enterprise Co. subsidiary Everett SpinCo, Inc. entered into a $2 billion term loan agreement on Dec. 16, according to an 8-K filing with the Securities and Exchange Commission.

The agreement provides for $375 million of three-year tranche A-1 term loans in U.S. dollars, $1.31 billion of five-year tranche A-2 term loans and five-year tranche A-3 term loans in euros equivalent to $315 million.

Commitments are available until Aug. 1, 2017 with possible extension to Sept. 30, 2017.

Bank of Tokyo Mitsubishi UFJ, Ltd, RBC Capital Markets, Bank of America Merrill Lynch, Goldman Sachs Bank USA, Lloyds Securities Inc. and Mizuho Bank, Ltd. are the joint lead arrangers.

Barclays Bank plc, Citigroup Global Markets Inc., Commerzbank AG New York Branch, PNC Capital Markets LLC, Sumitomo Mitsui Banking Corp. and TD Bank, NA are the senior managing agents.

Borrowings will bear interest at Libor plus a margin of 87.5 basis points to 162.5 bps for the tranche A-1, 100 bps to 175 bps for the tranche A-2 and 75 bps to 135 bps for the tranche A-3. In each case, the margin depends on the company’s ratings.

The company must maintain a minimum ratio of its consolidated EBITDA to its consolidated interest expense of 3 times and a maximum ratio of consolidated total debt to consolidated EBITDA of 3 times.

Proceeds are to be used in a spinoff of Hewlett Packard’s Enterprise Services segment and for general corporate purposes.

Hewlett Packard Enterprise is a technology company based in Palo Alto, Calif.

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