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 rating.
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 billion.
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 call said.
Dell shares closed little changed at $13.34.
(Reporting By Michelle Sierra and Leela Parker; Editing by Caleb Frazier, Lynn Adler)