Avago lifts U.S. term B to $9.75 billion, adds €500 million term B

By Sara Rosenberg

New York, Nov. 12 – Avago Technologies Cayman Finance Ltd. upsized its seven-year covenant-light term loan B (Ba1/BBB/BBB) to $9.75 billion from $7.5 billion and added a new €500 million term loan B to the capital structure, according to a market source.

Pricing on the U.S. and euro term loan B debt is Libor/Euribor plus 350 basis points with a step-down to Libor/Euribor plus 325 bps at 1.75 times net total leverage, a 0.75% floor and an original issue discount of 99, the source said.

The spread on the U.S. term loan firmed at the wide end of the Libor plus 325 bps to 350 bps talk and the step-down was added.

As before, the term loan B debt has 101 soft call protection for six months.

Allocations on the U.S. term loan B are expected on Friday.

Commitments for the euro term loan B are due at noon GMT on Tuesday, with allocations thereafter, the source added.

Bank of America Merrill Lynch, Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Barclays, Citigroup Global Markets Inc. and Wells Fargo Securities LLC are the arrangers on the deal. Co-managers are BMO Capital Markets Corp., Nomura and Bank of Tokyo-Mitsubishi UFJ.

Proceeds will be used to help fund the acquisition of Broadcom Corp. and to refinance existing debt.

Back in August, the company syndicated via left lead Credit Suisse a $500 million five-year revolver (Ba1) and a $4.25 billion five-year term loan A (Ba1) for the Broadcom transaction.

Pricing on the term loan A, which was upsized during syndication from $3.25 billion, is Libor plus 150 bps to 200 bps, subject to a ratings-based grid.

Under the agreement, Avago will acquire Broadcom for $17 billion in cash consideration and the economic equivalent of about 140 million Avago ordinary shares, valued at $20 billion as of May 27. Broadcom shareholders will own around 32% of the combined company.

Closing is expected in the first quarter of 2016, subject to regulatory approvals in various jurisdictions and the approval of Avago’s and Broadcom’s shareholders.

Avago is a designer, developer and supplier of analog semiconductor devices with headquarters in Singapore and San Jose, Calif. Broadcom is an Irvine, Calif.-based provider of semiconductor solutions for wired and wireless communications.

The combined company will adopt the name Broadcom Ltd.

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