Arris enters into $1.93 billion of term loans, $250 million revolver

By Angela McDaniels

Tacoma, Wash., April 2 - Arris Group, Inc., Arris Enterprises I, Inc. and Arris Enterprises II received commitments for a $1.1 billion term loan A, an $825 million term loan B and a $250 million revolving credit facility, according to an 8-K filing with the Securities and Exchange Commission.

Funding of the senior secured credit facilities will occur when the company's acquisition of the Motorola Home business from Google Inc. indirect subsidiary General Instrument Holdings, Inc. closes, which is expected to happen in the second quarter.

The revolver and the term loan A have terms of five years, and the term loan B has a term of seven years.

The initial interest rate is Libor plus 225 basis points for the revolver and the term loan A and Libor plus 275 bps for the term loan B. The term loan B has a Libor floor of 75 bps.

The spread over Libor ranges from 175 bps to 250 bps for the revolver and term loan A and is either 250 bps or 275 bps for the term loan B, depending on leverage.

The initial commitment fee for the revolver is 50 bps. It ranges from 35 bps to 50 bps.

The term loan B has 101 soft call protection for one year.

The facilities have a $300 million accordion feature.

The revolver has a $25 million letter-of-credit sublimit and a $25 million swingline loan sublimit.

The amortization on the term loan A is $13.75 million per quarter for two years, then $20,625,000 per quarter for one year and $27.5 million per quarter for the remainder of the loan.

The amortization on the term loan B is $2,062,500 per quarter.

BofA Merrill Lynch, RBC Capital Markets, Bank of Tokyo-Mitsubishi UFJ, Ltd., Fifth Third Bank, J.P. Morgan Securities LLC, PNC Capital Markets LLC and SunTrust Robinson Humphrey, Inc. are the lead arrangers and bookrunners with Royal Bank of Canada as syndication agent.

Bank of America, NA is the administrative agent, swingline lender and letter-of-credit issuer.

Bank of Tokyo-Mitsubishi UFJ, Fifth Third Bank, JPMorgan Chase Bank, NA, PNC Bank, NA, SunTrust Bank, HSBC Bank USA, NA, Regions Bank, RBS Citizens, NA and Sumitomo Mitsui Banking Corp. are the documentation agents.

Under the financial covenants, the company must maintain a minimum consolidated interest coverage ratio of 3.5 times, and it will be restricted by a maximum consolidated net leverage ratio that decreases throughout the first two years of the term from 4.25 times to 3.5 times.

The proceeds of the term loans will be used to pay a portion of the cash payment for the acquisition. The revolver will be used for working capital needs and other general corporate purposes.

The companies entered into the credit agreement on March 27.

Arris Group is a Suwanee, Ga.-based communications technology company. Motorola Home is an IP business.

Arris Group will be renamed Arris Enterprises, Inc. Arris Enterprises I and Arris Enterprises II will be merged and renamed Arris Group, Inc.

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