Avago Technologies Plans $5.1 Billion of Loans for LSI PurchaseChristine Idzelis
Avago Technologies Ltd., a Singapore-based chip manufacturer, is planning $5.1 billion of loans to back its purchase of LSI Corp.
A group of banks have underwritten $4.6 billion of seven-year term loans with a variable, blended interest rate of about 3.5 percent, according to a regulatory filing today. Avago will also receive a $500 million revolving credit line that will be undrawn, the filing shows.
Avago, which was founded in 1961 as an electronics division of Hewlett-Packard Co., agreed to acquire San Jose, California-based LSI for $6.6 billion. The deal will also be financed with a $1 billion investment from Silver Lake Partners and $1 billion of cash, according to the regulatory filing.
Silver Lake, the private-equity firm that helped acquire Avago before the company’s initial public offering in 2009, will provide $1 billion of 2 percent senior unsecured notes that are convertible at $48.04 per share, or preferred stock with equivalent economic terms, the filing shows.
Silver Lake and KKR & Co. were among a group of buyout firms that acquired the business for $2.66 billion in 2005 and took it public in 2009.
Under a revolver, money can be borrowed again once it’s repaid; in a term loan, it can’t.