Jefferies & Co. launched a $5.2 billion covenant-lite loan package on Monday that backs Carl Icahn’s bid for computer manufacturer Dell Inc, sources participating on a lender call said.<\/p>\n
The marketing to investors kicked off, and terms were detailed, during the 4 p.m. ET call.<\/p>\n
A $2.2 billion, six-year term loan B-1 is guided at LIB+400 with a 1 percent Libor floor. A $3 billion, 3.5-year term loan B-2 is guided at LIB+350 with a 75 basis-point Libor floor.<\/p>\n
Both tranches are offered at a discount of 99.5 cents on the dollar and will carry 101 soft call protection for one year.<\/p>\n
The six-year tranche will have standard 1 percent amortization, while the shorter-dated tranche amortizes at 10 percent per year.<\/p>\n
Icahn’s proposed tender offer will be financed with $7.5 billion of cash on the balance sheet, the $5.2 billion credit facility and $2.9 billion from the sale of receivables, sources listening to the call said.<\/p>\n
With this proposed funding, Icahn would move forward with an alternative plan made to Dell shareholders last week to tender 1.1 billion shares at $14 apiece.<\/p>\n
Following Icahn’s tender offer, Dell’s leverage will be 1.7 times. The transaction also assumes a Ba3\/BB- corporate credit rating.<\/p>\n
Commitments on the $5.2 billion facility are due on Thursday, said sources.<\/p>\n
Icahn is expected to have the $5.2 billion financing lined up for a July 18 shareholder vote on founder Michael Dell’s and Silver Lake Partners’ buyout offer for $13.65 a share, or $24.4 billion.<\/p>\n
If a superior bid prevails, joint lead lenders will earn 7.5 percent of the difference between the winning bid and Dell’s current $13.65 per share offer times the roughly 227 million shares that Icahn and Southeastern jointly own, officials on the call said.<\/p>\n
Dell shares closed little changed at $13.34.<\/p>\n
Icahn promises $16 billion buy-back of Dell stock<\/a><\/strong><\/p>\n Icahn short on cash for Dell proposal: committee<\/strong><\/a><\/p>\n Dell presented with more alternatives to buyout<\/a><\/strong><\/p>\n