Harman details $3.45 billion credit facility, $1.74 billion bonds for buyout

By Sara Rosenberg

New York, June 20 - Harman International Industries, Inc. detailed its buyout financing package, including plans for a $3.45 billion senior secured credit facility and $1.74 billion of high-yield bonds, according to an S-4 filed with the Securities and Exchange Commission Wednesday.

Bank of America, Credit Suisse, Goldman Sachs and Lehman Brothers are the lead banks on the financing.

The credit facility consists of a $2.9 billion seven-year term loan and a $550 million six-year revolver.

Harman can elect to have a euro-denominated sub-tranche under its term loan.

In addition, the company has the option to get a receivables securitization or asset based lending facility, which would reduce the revolver size on a dollar-for-dollar basis.

Meanwhile, the bonds, a portion of which can be euro-denominated, will be comprised of a $1.16 billion senior unsecured notes tranche and a $580 million senior subordinated notes tranche.

As a backup for the bonds, the company has received a commitment for a $1.16 billion senior unsecured bridge facility and an up to $580 million senior subordinated bridge facility.

Goldman Sachs, Bank of America, Credit Suisse and Lehman Brothers are the joint lead arrangers and joint bookrunners for the bridge loans.

Other LBO financing will come from $3.5 billion in equity.

Harman is being bought by Kohlberg Kravis Roberts & Co. LP and GS Capital Partners for $120.00 in cash per share. The transaction is valued at about $8 billion.

As an alternative to receiving the cash consideration, Harman's stockholders will be offered the opportunity to elect to exchange some or all of their shares of Harman stock for shares in the new corporation incorporated by KKR and GS Capital in order to acquire Harman.

The total amount of Harman shares that may elect to receive shares in the post-transaction corporation is 8.3 million, which would represent $1 billion and an about 27% equity stake in Harman following the transaction.

Completion of the transaction is expected to occur in the third quarter and is subject to the approval of Harman stockholders, customary closing conditions and regulatory approvals.

Harman is a Washington, D.C., manufacturer of high fidelity audio products and electronic systems for the automotive, consumer and professional markets.

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