Cavium gets $750 million commitment from JPMorgan for QLogic purchase

By Wendy Van Sickle

Columbus, Ohio, June 15 – Cavium, Inc. entered into a commitment letter for $750 million of senior secured term loans with JPMorgan Chase Bank, NA on Wednesday in connection with Cavium’s planned acquisition of QLogic Corp., according to an 8-K filing with the Securities and Exchange Commission.

The committed term loans include a $650 million term B facility and a $100 million interim term loan facility.

Under the terms of the commitment letter, JPMorgan will act as a joint lead arranger and a joint bookrunner.

The actual terms have not been finalized and may vary from those set out in the commitment letter, which include that

• The term loan facilities will be available in a single drawing on the closing date of the acquisition;

• Pricing for the term loan B is Libor plus 300 basis points and for the interim term loan is Libor plus 200 bps; and

• The term loan B will mature six years after the acquisition closes, and the interim term loan will mature on Feb. 15, 2017.

In addition to the committed financing, the acquisition is set to be funded by $220 million of cash on Cavium’s balance sheet and $400 million of new Cavium equity.

The transaction is expected to close in the third quarter.

Cavium is a provider of highly integrated semiconductor products that enable intelligent processing in enterprise, data center, cloud, wired and wireless service provider applications. Its headquarters are in San Jose, Calif. QLogic makes server and storage networking connectivity products and is based in Aliso Viejo, Calif.

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