Bloomberg News

Semtech Decreases Rate on $350 Million of Purchase Loan

March 02, 2012

Semtech Corp. (SMTC), a supplier of analog and mixed-signal semiconductors, cut the interest rate it will pay on $350 million of loans it’s seeking to support the acquisition of Gennum Corp. (GND), according to a person with knowledge of the transaction.

A $250 million five-year term loan B will now pay 3.25 percentage points more than the London interbank offered rate, down from 3.25 percentage points to 3.5 percentage points, said the person, who declined to be identified because the terms are private. Libor, a rate banks say they can borrow in dollars from each other, will now have a 1 percent floor compared with 1.25 percent originally offered.

Semtech is proposing to sell the loan at 99 cents on the dollar, the person said, reducing proceeds for the company and boosting the yield to investors.

The $100 million five-year term loan A portion will now pay interest at 2.75 percentage points more than Libor, with no minimum on the benchmark, the person said. The interest rate will step down to 2.5 percentage points more than Libor, when leverage, or debt to earnings before interest, taxes, depreciation and amortization, is at 1.5 times, the person said.

The company is proposing to sell the term loan A piece at 99.5 cents on the dollar, the person said.

Commitment Deadline

Jefferies Group Inc. is arranging the financing for the Camarillo, California-based company and commitments are due today at 3 p.m. in New York, the person said.

Semtech is acquiring Burlington, Ontario-based Gennum for about $494 million, according to a Jan. 24 company statement distributed by Business Wire. Shareholders of Gennum will receive C$13.55 ($13.59) in cash for each common share held.

Linda Brewton, senior manager of investor relations at Semtech, didn’t immediately respond to an e-mail message seeking comment.

A term loan A is sold primarily to banks, while so-called B loans are mainly bought by non-bank lenders such as collateralized loan obligations, mutual funds and hedge funds.

To contact the reporter on this story: Michael Amato in New York at mamato3@bloomberg.net

To contact the editor responsible for this story: Faris Khan at fkhan33@bloomberg.net


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