Fitch Downgrades Dell's IDR to 'BB+'; Rating Watch Negative

  Fitch Downgrades Dell's IDR to 'BB+'; Rating Watch Negative

Business Wire

NEW YORK -- February 5, 2013

Fitch Ratings has downgraded Dell Inc.'s (Dell) ratings as follows:

--Long-term Issuer Default Rating (IDR) to 'BB+' from 'A';

--Bank credit facilities to 'BB+' from 'A';

--Senior unsecured debt at 'BB+' from 'A';

--Short-term IDR to 'B' from 'F1';

--Commercial paper (CP) to 'B' from 'F1'.

Fitch has placed the ratings on Rating Watch Negative pending the conclusion
of Dell's proposed leveraged buyout (LBO).

Approximately $12 billion of debt is affected by Fitch's action, including
Dell's undrawn revolving credit facilities with aggregate capacity of $3
billion.

SENSITIVITY/RATING DRIVERS

The downgrades and placement on Rating Watch Negative reflect Dell's
announcement that it will be acquired by Michael Dell and Silver Lake in a LBO
transaction, which values the equity at $13.65 per share or $24.4 billion. The
transaction remains subject to a 45-day go shop period and shareholder
approval. The transaction is expected to close by the end of July 2013.

Key details of the financing package for the proposed LBO have yet to be
disclosed, but Fitch continues to expect pro forma leverage in the 3.5x - 4.5x
range, as previously indicated in our press release dated Jan. 17, 2013. This
would likely result in a long-term IDR in the mid to high single 'B' range.

A 'BB-' rating is a possibility based solely on leverage at the very low end
of the range. However, various other factors need to be considered, including
the highly competitive environment in which Dell operates, the uncertain macro
economy, public sector weakness, reduced financial flexibility to pursue
future acquisitions, a nascent track record of its recently acquired
enterprise portfolio, and the potential to burn cash in down cycles due to its
negative working capital position.

Additional information is available at 'www.fitchratings.com'. The ratings
above were solicited by, or on behalf of, the issuer, and therefore, Fitch has
been compensated for the provision of the ratings.

Applicable Criteria and Related Research:

--'Corporate Rating Methodology' (Aug. 8, 2012).

Applicable Criteria and Related Research:

Corporate Rating Methodology

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=684460

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Contact:

Fitch Ratings
Primary Analyst
John M. Witt, CFA, +1-212-908-0673
Senior Director
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Secondary Analyst
Jason Pompeii, +1-312-368-3210
Senior Director
or
Committee Chairperson
Jamie Rizzo, CFA, +1-212-908-0548
Sr. Director
or
Media Relations
Brian Bertsch, +1 212-908-0549 (New York)
brian.bertsch@fitchratings.com
 
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