Morgan Stanley will provide financing for a pair of deals totaling $5.1 billion in the next month. The firm will back the spin-off of Hanesbrands by Sara Lee Corp. and is also the lead on financing for Advanced Micro Devices' acquisition of ATI Technologies.
Investors are meeting Tuesday afternoon at the W Hotel in New York for the bank meeting regarding a $2.6 billion bank facility for the spin-off of Hanesbrands. Morgan Stanley and Merrill Lynch are leading the financing, which consists of a $500 million revolver, a $350 million term loan "A," a $1.3 billion term loan "B" and a $450 million second lien, according to a banker. Price talk is LIBOR plus 1 3/4% for the pro rata and LIBOR plus 2% on the "B," though pricing has not been finalized. One investor said that if pricing stays where it is being talked, it could be a good deal.
Sara Lee will receive $2.4 billion from its apparel business for the spin-off. All outstanding shares of Hanesbrands will be distributed to Sara Lee stockholders pro rata and tax free. The spin-off is expected to be completed by early September. Afterwards, the companies will be separate entities, neither retaining any ownership interest in the other. Hanesbrands is also expected to become a public company at that time, according to a news release.
Chicago-based Sara Lee is a manufacturer and marketer of brand-name consumer products, including: Ball Park, Hillshire Farm, Jimmy Dean and its namesake, Sara Lee. Hanesbrands is a consumer goods company that includes the brands: Hanes, Champion, Playtex and Wonderbra. Calls to Theo de Kool, cfo, were not returned. A spokeswoman declined comment.
Morgan Stanley will also be a lead on a $2.5 billion term loan for Advanced Micro Devices to back its $5.4 billion acquisition of ATI Technologies, according to an AMD spokesman. The financing is expected to come to market in early fall, according to a banker.
AMD will acquire all outstanding common shares of ATI with $4.2 billion in cash, which includes the $2.5 billion loan, and 57 million ($1.2 billion) of AMD shares. Standard & Poor's put AMD on CreditWatch with negative implications following the announcement of the acquisition.
Sunnyvale, Calif.-based AMD is a provider of microprocessor solutions for computing, communications and consumer electronics markets. Ontario-based ATI designs and manufactures 3-D graphics, personal computer platform technologies and digital media silicon solutions. Bob Rivet, AMD cfo, was traveling and could not be reached. Calls to Patrick Crowley, ATI cfo, and a spokesman were not returned.