Bloomberg News

Dell Said to Set Rate on $5.5 Billion of Term Loans for Buyout

September 11, 2013

Dell Inc. (DELL:US), the computer maker that Chief Executive Officer Michael Dell and Silver Lake Management LLC are buying for $24.9 billion, set the rate on $5.5 billion of loans it’s seeking to support the acquisition, according to a person with knowledge of the transaction.

A $4 billion, 6 1/2-year term loan will pay interest at 3.75 percentage points more than the London interbank offered rate, with a 1 percent minimum on the lending benchmark, said the person who asked not to be identified because the terms aren’t set. The loan will be offered to lenders at 99 cents on the dollar.

Dell is proposing to pay interest at 2.75 percentage points to 3 percentage points more than Libor, with a 1 percent floor on a $1.5 billion term piece that matures in five years, the person said. That portion will be offered to lenders at 99.5 cents.

The loans are part of a $13.8 billion financing commitment Dell obtained in February to back the deal, which is the biggest leveraged buyout since Energy Future Holdings Corp. was purchased by KKR & Co. and Texas Pacific Group in 2007. Billionaire financier Carl Icahn gave up battling for control of Round Rock, Texas-based Dell on Sept. 9, ending months of opposition that impeded the buyout from being completed.

The covenant-light financing, meaning there are no financial-maintenance requirements, is being arranged by Bank of America Corp., Credit Suisse Group AG, Barclays Plc, Royal Bank of Canada and UBS AG, the person said. Lenders must let the banks know on Sept. 23 whether they will participate in the deal.

To contact the reporter on this story: Krista Giovacco in New York at kgiovacco1@bloomberg.net.

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


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