MaxLinear revises commitment to permit more term loan A, less term B

By Sara Rosenberg

New York, Oct. 25 – MaxLinear Inc. amended and restated its credit facilities commitment letter to allow for additional term loan A commitments with a dollar-for-dollar reduction to the committed term loan B, according to a 10-Q filed with the Securities and Exchange Commission on Tuesday.

The amended commitment letter was obtained on Oct. 24.

In June, the company got a commitment for a $2,737,500,000 seven-year covenant-lite term loan B and a $512.5 million five-year term loan A. This was a change from the original commitment, which called for a $3.25 billion term loan B and no term loan A.

The company’s $3.5 billion senior secured credit facilities commitment also 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 June 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, with CSA being 10 bps one-month rate, 15 bps three-month rate and 25 bps six-month rate.

The commitment letter had 101 soft call protection for six months and amortization of 1% per annum included in the term loan B.

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. The implied value of the total transaction consideration for Silicon Motion is about $4.3 billion.

Other funds for the transaction will come from cash on hand.

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

Closing is expected by the first half of 2023, subject to customary conditions.

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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