Agilent semiconductor buyers plan $1 billion three-part bond offering

By Paul Deckelman

New York, Nov. 2 - Avago Technologies Finance Pte. Ltd. plans to issue $1 billion of bonds as part of the buyout of Agilent Technologies Inc.'s semiconductor unit, junk bond primary market sources said Wednesday.

The bonds will be issued in three tranches, a source said, consisting of $750 million of eight-year fixed-rate senior unsecured notes and 71/2-year floating-rate notes - the exact size of each tranche within that $750 million is to be determined - and $250 million of 10-year senior subordinated notes.

The 71/2-year notes will be non-callable for the first two years after issue, the eight-year notes will be non-callable for the first four years, and the 10-year notes will be non-callable for the first five years.

The Rule 144A offering will be brought to market via joint book-running managers Lehman Brothers, Citigroup and Credit Suisse First Boston.

It will be sold to potential investors via a three-continent roadshow process that begins in Europe next Monday, moves to Asia on Nov. 10 and then on to the United States on Nov. 14, with pricing anticipated at the end of the Nov. 14 week.

The bond sale by Avago is part of a two-part financing effort by New York-based buyout specialists Kohlberg Kravis Roberts & Co. and Silver Lake Partners of Menlo Park, Calif., who are purchasing Agilent's Semiconductor Products Group for $2.66 billion. Besides the billion-dollar bond sale by Singapore-based Avago, an affiliate of the two buyout shops, KKR and Silver Lake will also line up $975 million of credit facilities.

Agilent announced the sale of SPG to the buyout shops on Aug. 15 in the context of a broader effort by the Palo Alto, Calif.-based technology manufacturer to restructure by divesting non-core assets and refocusing itself as purely a high-tech measurements company servicing a $40 billion worldwide market. At that time, Agilent simultaneously announced a definitive agreement to sell its stake in Lumileds to Royal Philips Electronics for $950 million plus repayment of $50 million of debt from Lumileds, as well as plans to spin off its SOC and Memory Test businesses as soon as practical in 2006.

The disposal of SPG and its 6,900 employees is expected to close by Dec. 1.

Earlier in the week, semiconductor maker PMC-Sierra Inc. announced that it will buy Agilent's storage semiconductor unit, I/O Solutions Division, which is part of the Semiconductor Products Group, for $425 million. That sale is expected to close in January.

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