RLPC: Dell updates terms on increased $7.2B LBO loan

Mon Sep 23, 2013 4:24pm EDT
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By Natalie Wright

NEW YORK, Sept 23 (Reuters) - Computer maker Dell Inc updated facility sizes on its new approximately $7.2 billion loan that will back the company's $25 billion buyout by founder and CEO Michael Dell and private equity firm Silver Lake Partners, sources told Thomson Reuters LPC.

Tranching now includes a $1.5-1.55 billion, five-year term loan C, a $4.625-4.675 billion, 6.5-year term loan B, and a 650-700 million euro (roughly $877-945 million), euro-denominated term loan B. The term loans are expected to be covenant-lite.

The TLC is now guided at LIB+275, with a 1 percent Libor floor, and a 99.5 original issue discount (OID). Previously, the TLC was guided at LIB+275-300.

Price talk on the U.S. dollar TLB is now LIB+350, with a 1 percent Libor floor and a 99 OID. Previously, the U.S. dollar TLB was guided at LIB+375.

The euro TLB is now guided at EUR+375, with a 1 percent floor and a 99 OID. Previously the euro TLB was guided at EUR+400.

The Libor floors and OIDs are unchanged. The TLC will include 101 soft call protection for six months. The U.S. dollar/euro TLB will include 101 soft call protection for one year, versus six months previously.

Dell's leveraged buyout (LBO) loan, the second-largest institutional LBO loan this year behind Heinz's $9.5 billion institutional issuance backing its buyout by Berkshire Hathaway and 3G Capital, has been a major focus of leveraged investors since its launch September 11. The books were reportedly strong for both the bonds and loans during syndication.

"While the company definitely faces some headwinds, I think Dell will be able to generate a large amount of free cash flow to repay its debt," said one portfolio manager.   Continued...