KLA-Tencor plans credit agreement for $2.75 billion special dividend

By Jennifer Chiou

New York, Oct. 30 – KLA-Tencor Corp. intends to enter into a credit agreement with JPMorgan Chase Bank, NA as administrative agent that will fund, along with cash on hand, a roughly $2.75 billion special dividend to the company’s stockholders, according to a 424B5 filing with the Securities and Exchange Commission.

The company said that the credit agreement will consist of a commitment for amortizing term loans and a revolving credit facility. It did not state the size of the loans.

Borrowings will bear interest at Libor plus 100 basis points to 175 bps, depending on credit ratings.

The commitment fee will range from 10 bps to 25 bps.

The filing added that the company will be required to maintain a maximum leverage ratio of 4.5 to 1.0, stepping down over 10 quarters to a maximum of 3.0 to 1.0, and a minimum interest coverage ratio of 3.5 to 1.0.

The Milpitas, Calif.-based company is a supplier of process control and yield management services for the semiconductor and related nanoelectronics industries.

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