Dell Inc. (DELL:US), the personal computer maker being acquired by Silver Lake Management LLC and Chief Executive Officer Michael Dell, set the rate it will pay on $3.25 billion of loans it’s seeking to support the buyout, according to a person with knowledge of the transaction.
A $2 billion first-lien so-called bridge portion will pay interest at 400 basis points more than the London interbank offered rate, said the person, who asked not to be identified because the information is private. Libor, a rate banks say they can borrow in dollars from each other, will have a 1 percent floor.
A $1.25 billion second-lien piece will pay interest at 5.25 percentage points more than Libor, with a 1 percent floor, according to the person.
Investors are being offered a 50 basis-point commitment fee, which will be paid when the transaction closes, the person said.
Credit Suisse Group AG, Barclays Plc, Bank of America Corp. and Royal Bank of Canada are arranging the bridge financing and commitments are due by noon on Feb. 27 in New York, the person said.
Dell also is seeking a $4 billion term loan B portion, a $1.5 billion term loan C piece and a $2 billion asset-back slice, according to data compiled by Bloomberg. The same banks are arranging that portion of the financing, the data show.
The term loans will be covenant-light, meaning the debt won’t carry typical lender protections such as financial- maintenance requirements, the person said.
Silver Lake, the technology-focused buyout firm based in Menlo Park, California, is buying Dell for $24.4 billion in the biggest LBO since Energy Future Holdings Corp. was purchased by KKR & Co. and Texas Pacific Group in 2007.
Gemma Hart, a spokeswoman for Silver Lake, declined to comment.
Bridge facilities are short-term loans that usually mature in one year and are often used as backstops to bond offerings or longer-dated bank debt.
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