Summary
This 8-K filing reports on the completion of Flextronics International Ltd.'s (FLEX) acquisition of Solectron Corporation, a significant strategic move for the company. The acquisition was financed through a new $1.759 billion term loan facility. A substantial portion of this facility, $1.109 billion, was drawn at closing to fund the merger and related expenses. The remaining available credit can be used for specific purposes, including the repurchase and redemption of Solectron's outstanding senior subordinated notes and convertible notes, as well as to cover additional merger costs.
Key Highlights
- 1Completion of the acquisition of Solectron Corporation by Flextronics International Ltd. (FLEX) on October 1, 2007.
- 2Entry into a $1.759 billion term loan agreement to finance the acquisition, with $1.109 billion drawn at closing.
- 3The term loan facility is unsecured and includes customary covenants restricting debt, investments, acquisitions, liens, asset disposals, and distributions, alongside a maximum debt-to-EBITDA ratio.
- 4A portion of the term loan facility ($650 million) is available for delayed draw to fund repurchases/redemptions of Solectron's 8% Senior Subordinated Notes due 2016 and 0.5% Senior Convertible Notes due 2034.
- 5Solectron's 8% Senior Subordinated Notes ($150 million outstanding) are subject to a change in control offer to repurchase at 101% of par and a redemption at par plus a make-whole premium, both due October 31, 2007.
- 6Solectron's approximately $450 million in Convertible Notes are subject to change in control repurchase offers at 100% of par, expected to be repurchased by December 14, 2007.
- 7The term loan bears interest at either a base rate plus 1.25% or LIBOR plus 2.25%, with amortization of 1% per annum and the balance due at maturity (5 or 7 years).