Details Emerge On Semiconductor Mega Deal

Terms for the financing to back the $17.6 billion buyout of Freescale Semiconductor by a consortium of private equity groups hit the market last week.

  • 06 Oct 2006
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Terms for the financing to back the $17.6 billion buyout of Freescale Semiconductor by a consortium of private equity groups hit the market last week. The transaction will be funded in part by a $4.25 senior secured billion credit facility led by Citigroup, Credit Suisse, JPMorgan, Lehman Brothers and UBS.

The deal includes a six-year, $750 million revolver and a seven-year, $3.5 billion term loan facility. Financing also leaves the option open for $4.35 billion of senior unsecured loans under a bridge facility and $1.8 billion of senior subordinated notes under a bridge facility, according to an Oct. 3 filing with the Securities and Exchange Commission. Freescale also plans to issue up to $6.15 billion of senior unsecured or senior subordinated unsecured notes, according to the filing. The company anticipates that substantially all of its $4.1 billion in outstanding notes will either be tendered or repaid as part of the transaction, according to a company release.

The Blackstone Group, The Carlyle Group, Permira Funds and Texas Pacific Group are all part of the consortium taking the Austin, Texas-based company private. Announced Sept. 15, the firms will acquire all of the outstanding Class A and B shares for $40 per share in cash. Buysiders and ratings agencies alike have recently noted the influx of tech deals coming to the market and a company's willingness to take on large amounts of debt. Standard & Poor's lowered the Freescale's ratings down from investment level and expects to lower it further to the single B category after the deal is completed, according to a release.

Freescale Semiconductor is a designer and manufacturer of embedded semiconductors for the automotive, consumer, industrial, networking and wireless markets. Calls to a company spokesman were not returned. Spokesmen for Blackstone, Carlyle and TPG declined comment on when the financing would be coming to market. A spokeswoman for Permira did not return calls.

  • 06 Oct 2006

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2 Morgan Stanley 2,420 6 13.57
3 Goldman Sachs 2,096 5 11.75
4 BNP Paribas 1,686 6 9.45
5 Barclays 1,565 4 8.78

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5 Credit Suisse 22,692.50 70 6.44%