Freescale completes toggle notes offer, will get $917.5 million of new term loans

By Angela McDaniels

Tacoma, Wash., March 25 - Freescale Semiconductor Inc. said holders of about $956.8 million of its $1.5 billion 9 1/8%/9 7/8% senior pay-in-kind notes due 2014 agreed to exchange their notes for new incremental term loans during an offer that ended on March 24.

A similar offer for the company's $475 million senior floating-rate notes due 2014, $2.29 billion 8 7/8% senior fixed-rate notes due 2014 and $1.51 billion 10 1/8% senior subordinated notes due 2016 ended on March 11.

Under that offer, the company received commitments for $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 total amount of commitments received, the company will incur $917.5 million of the new term loans under its senior secured credit facility. Of this total, $236.1 million is attributable to the toggle notes.

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, which was midnight ET on March 10.

Holders will also receive accrued interest in cash at closing, which will be March 26 for the toggle notes and was March 17 for the other notes.

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.

Under the offer, the company said it would accept 10 1/8% notes up to a commitment of $746.27 million, which resulted in a proration factor of 0.779. The toggle notes, floaters and 8 7/8% notes were not subject to proration.

The toggle notes had 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 for the toggle notes was originally scheduled to expire on the same day as the other notes. When the deadline for the toggle notes was extended to March 24, the company also waived the $250 million limit for toggle notes and noted that the waiver would not affect the maximum total principal amount of other accepted notes series.

Freescale said the purpose of the note invitations, which began on Feb. 10, was to improve financial flexibility by reducing debt and related interest expense.

The offer was only for beneficial owners of notes who certified 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. Commitments from existing lenders had to be made by Feb. 19 and funded with available funds in dollars by 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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