Summary
This Form 8-K filing by Microchip Technology Incorporated (MCHP) on May 29, 2018, primarily announces the completion of its acquisition of Microsemi Corporation. The merger, effective on May 29, 2018, involved Microsemi merging with Microchip's wholly-owned subsidiary, Maple Acquisition Corporation, with Microsemi continuing as a wholly-owned subsidiary of Microchip. The aggregate merger consideration paid was approximately $8.2 billion in cash. Concurrently, Microchip entered into an Amended and Restated Credit Agreement, which includes a $3.8 billion revolving loan facility and a $3.0 billion term loan facility. The proceeds from these facilities were used to finance the Microsemi acquisition, associated fees, and expenses. The credit agreement also outlines terms for future borrowings, interest rates, repayment schedules, covenants, and events of default, and includes guarantees from certain subsidiaries and a security interest in substantially all of Microchip's assets.
Key Highlights
- 1Microchip Technology Inc. has successfully completed the acquisition of Microsemi Corporation for approximately $8.2 billion in cash.
- 2The acquisition was financed through a new $3.8 billion revolving loan facility and a $3.0 billion term loan facility under an Amended and Restated Credit Agreement.
- 3The revolving loan facility consists of two tranches: approximately $244.3 million maturing in February 2020 and approximately $3.6 billion maturing in May 2023.
- 4The Term Loans, totaling $3.0 billion, will be repaid through quarterly amortization payments of 0.25% and mandatory prepayments based on debt incurrence, asset sales, and excess cash flow.
- 5The credit agreement includes customary covenants restricting actions such as incurring subsidiary indebtedness, granting liens, and making acquisitions, as well as financial maintenance covenants (total leverage, senior leverage, interest coverage ratios).
- 6The company's obligations under the credit agreement are guaranteed by certain subsidiaries and secured by a pledge of substantially all of its assets.
- 7Historical financial statements for Microsemi are not included in this initial filing and will be provided via amendment.