MaxLinear revises debt commitment to trim term B size, add term A

By Sara Rosenberg

New York, June 21 – MaxLinear Inc. amended and restated its credit facilities commitment letter to reduce its seven-year covenant-lite term loan B to $2,737,500,000 from $3.25 billion and add a $512.5 million five-year term loan A to the capital structure, according to an 8-K filed with the Securities and Exchange Commission on Tuesday.

The company’s $3.5 billion senior secured credit facilities commitment still provides for a $250 million five-year revolver.

Wells Fargo Securities LLC, BMO Capital Markets, Citizens Bank and Truist Securities are the joint lead arrangers and bookrunners on the deal. Wells Fargo is the administrative agent.

Based on the commitment letter, initial pricing on the revolver and the term loan A is expected at SOFR plus 225 basis points with a 0% floor, and pricing on the term loan B is expected at SOFR+CSA plus 300 bps with a 0.5% floor.

CSA is 10 bps one-month rate, 15 bps three-month rate and 25 bps six-month rate.

The term loan B has 101 soft call protection for six months and amortization of 1% per annum.

Proceeds will be used to help fund the acquisition of Silicon Motion, to refinance debt and to pay related fees and expenses.

Under the agreement, each American Depositary Share of Silicon Motion will receive $93.54 in cash and 0.388 of a share of MaxLinear stock, and each ordinary share of Silicon Motion not represented by an ADS will receive $23.385 in cash and 0.097 of a share of MaxLinear common stock.

Upon closing of the transaction, MaxLinear shareholders will own about 86% of the combined company and Silicon Motion stockholders will own about 14%.

Based on the closing price of MaxLinear’s shares on May 4, the implied value of the total transaction consideration for Silicon Motion is $3.8 billion.

Other funds for the transaction will come from about $277 million of cash from the combined company balance sheets.

The company is targeting gross leverage of less than 4x at close and less than 3x at 18 months after close.

Combined revenues are expected to be more than $2 billion annually.

Closing is expected by the first half of 2023, subject to customary conditions, including Silicon Motion shareholders’ approval and regulatory approvals.

MaxLinear is a Carlsbad, Calif.-based provider of radio frequency, analog and mixed-signal integrated circuits for broadband, connectivity, and infrastructure markets. Silicon Motion is a supplier of NAND flash controllers for solid state storage devices.

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