By Michelle Sierra and Leela Parker
June 24 Jefferies & Co. launched a $5.2 billion
covenant-lite loan package on Monday that backs Carl Icahn's bid
for computer manufacturer Dell Inc, sources
participating on a lender call said.
The marketing to investors kicked off, and terms were
detailed, during the 4 p.m. ET call.
A $2.2 billion, six-year term loan B-1 is guided at LIB+400
with a 1 percent Libor floor. A $3 billion, 3.5-year term loan
B-2 is guided at LIB+350 with a 75 basis-point Libor floor.
Both tranches are offered at a discount of 99.5 cents on the
dollar and will carry 101 soft call protection for one year.
The six-year tranche will have standard 1 percent
amortization, while the shorter-dated tranche amortizes at 10
percent per year.
Icahn's proposed tender offer will be financed with
$7.5 billion of cash on the balance sheet, the $5.2 billion
credit facility and $2.9 billion from the sale of receivables,
sources listening to the call said.
With this proposed funding, Icahn would move forward with an
alternative plan made to Dell shareholders last week to tender
1.1 billion shares at $14 apiece.
Following Icahn's tender offer, Dell's leverage will be 1.7
times. The transaction also assumes a Ba3/BB- corporate credit
Commitments on the $5.2 billion facility are due on
Thursday, said sources.
Icahn is expected to have the $5.2 billion financing lined
up for a July 18 shareholder vote on founder Michael Dell's and
Silver Lake Partners' buyout offer for $13.65 a share, or $24.4
If a superior bid prevails, joint lead lenders will earn 7.5
percent of the difference between the winning bid and Dell's
current $13.65 per share offer times the roughly 227 million
shares that Icahn and Southeastern jointly own, officials on the
Dell shares closed little changed at $13.34.