Freescale gets commitments for $3.03 billion in offer to replace notes with loans, extends toggle notes offer

By Jennifer Chiou

New York, March 11 - Freescale Semiconductor Inc. said it completed its offer to replace its $475 million of senior floating-rate notes due 2014, $2.29 billion of 8 7/8% senior fixed-rate notes due 2014 and $1.51 billion of 10 1/8% senior subordinated notes due 2016 with new incremental term loans while extending its offer for the $1.5 billion of 9 1/8% - 9 7/8% in-kind - senior pay-in-kind notes due 2014 to midnight ET on March 24 from March 10.

The early deadline had previously been prolonged to midnight ET on March 10 from Feb. 26 and before that Feb. 24.

In addition, the company announced that it waived the $250 million limit for the senior toggle notes, adding that the waiver will not affect the maximum aggregate principal amount of other accepted notes series.

Under the offer, the company said it would accept 10 1/8% notes up to a commitment of $746.27 million. Freescale said that based on its preliminary calculations, the proration factor for the 10 1/8% notes will be 0.779.

The floaters and the 8 7/8% notes will not be subject to proration.

As of midnight ET on March 10, the company said that it received commitments with respect to $3.03 billion of notes and based on this amount, it would incur about $897 million of new incremental term loans. Holders had tendered $941.3 million of the senior toggle notes, $958.08 million of the 10 1/8% notes, $281.22 million of floaters and $844.58 million of the 8 7/8% notes.

Based on the amount of commitments as of 5 p.m. ET on Feb. 26, the company previously said it would issue about $703 million of the up to $1 billion of term loans in the offer.

Holders of about $2.89 billion of notes had given commitments as of Feb. 24, which would have resulted in the issuance of $694 million of term loans.

The incremental term loans mature on Dec. 15, 2014 and will be guaranteed by the same guarantors under the company's senior secured credit facility. Interest will be 12½% per year, payable quarterly.

For each $1,000 principal amount of notes, holders will receive $246.80 of loans for the toggle notes (including accrued PIK interest), $335.00 for the floaters and 10 1/8% notes and $380.00 for the 8 7/8% notes. The total payments include $25.00 of loans for notes tendered by the early commitment date.

Holders will also receive accrued interest in cash at closing.

The toggle notes have first priority of acceptance in the offer, followed by the 10 1/8% notes, then the floaters and finally the 8 7/8% notes.

The offer began on Feb. 10 and expired at midnight ET on March 10 for three series of notes.

Freescale said the purpose of the note invitations is to improve financial flexibility by reducing debt and related interest expense.

The offer was only for beneficial owners of notes who certify that they are a qualified institutional buyer and either a commercial bank, insurance company, finance company, financial institution or any fund that invests in loans in the ordinary course of business and has total assets of more than $5 million.

The company was also seeking commitments from existing lenders under its senior secured credit facility for the incremental term loans. These commitments will reduce the maximum $1 billion available to noteholders.

Commitments from existing lenders had to be made by 5 p.m. ET on Feb. 19 and must be funded with available funds in dollars by 11 a.m. ET on March 17.

Global Bondholder Services Corp. (866 937-2200 or collect 212 925-1630) was the information agent.

The issuer is an Austin, Texas-based designer and manufacturer of embedded semiconductors.

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