8-KMaterial AgreementsFinancial EventsExhibits & Filings

Dell Technologies Inc. 8-K Report, Material Agreement (Dec 21, 2018)

Filed December 21, 2018For Securities:DELL

Summary

This 8-K filing by Dell Technologies Inc. (DELL) announces a significant amendment to its Senior Secured Credit Agreement, specifically the Fourth Amendment, executed on December 20, 2018. The primary purpose of this amendment is to facilitate Dell's pending Class V Transaction, which involves a merger and a special dividend from VMware. To fund this transaction, Dell has significantly increased its borrowing capacity. Key changes include an increase in the aggregate revolving commitments by $1,170 million to $4,500 million. More substantially, Dell has secured a new senior secured term loan A-4 facility of $1,650 million and a new senior secured term loan A-5 facility of $5,000 million, of which $2,016 million was drawn upon closing. The proceeds from these new loan facilities, along with a margin loan and VMware's special dividend, will be used to cover the cash consideration, fees, and expenses associated with the Class V Transaction. The company also noted that any excess proceeds from the Term A-4 Loans are expected to be used for general corporate purposes.

Key Highlights

  • 1Dell Technologies Inc. amended its Senior Secured Credit Agreement (Fourth Amendment) on December 20, 2018.
  • 2The amendment increases aggregate revolving commitments by $1,170 million to $4,500 million.
  • 3A new senior secured term loan A-4 facility of $1,650 million was established, maturing in December 2023.
  • 4A new senior secured term loan A-5 facility of $5,000 million was established, with a portion drawn immediately and an early maturity date tied to the Class V Transaction.
  • 5Proceeds from these new credit facilities, a margin loan, and VMware dividend will fund the Class V Transaction.
  • 6The Term A-4 Loans carry an interest rate of LIBOR + 1.25%-2.00% or Base Rate + 0.25%-1.00%, dependent on credit ratings.
  • 7The Term A-5 Loans carry an interest rate of LIBOR + 1.75% or Base Rate + 0.75%.
  • 8If the Class V Transaction is not completed, Dell intends to repay all outstanding Term A-4 and Term A-5 Loans.

Frequently Asked Questions

The primary purpose of the Fourth Amendment is to raise significant capital to fund the aggregate cash consideration, fees, and expenses related to Dell's pending Class V Transaction, which involves a merger and a special dividend from VMware.

Dell established a new senior secured term loan A-4 facility of $1,650 million and a new senior secured term loan A-5 facility of $5,000 million. Additionally, revolving commitments were increased by $1,170 million to $4,500 million.

The Term A-4 Loans bear interest at LIBOR plus an applicable margin ranging from 1.25% to 2.00%, or a base rate plus an applicable margin of 0.25% to 1.00%, depending on Dell's corporate credit rating. The Term A-5 Loans bear interest at LIBOR plus an applicable margin of 1.75% or a base rate plus an applicable margin of 0.75%.

If the Class V Transaction is not completed, Dell Technologies intends to repay all outstanding Term A-4 Loans and Term A-5 Loans.