Summary
Western Digital Corporation (WDC) filed an 8-K on April 13, 2016, to report the completion of a significant debt offering. The company issued $1.875 billion in 7.375% senior secured notes due 2023 and $3.35 billion in 10.500% senior unsecured notes due 2024. The aggregate principal amount of this offering is $5.225 billion. The proceeds from these notes were placed into escrow accounts, contingent on the successful consummation of Western Digital's previously announced acquisition of SanDisk Corporation. If the acquisition does not close by a specified date, the notes will be redeemed at their principal amount plus accrued interest.
Key Highlights
- 1Completion of a substantial $5.225 billion debt offering, comprising $1.875 billion in senior secured notes and $3.35 billion in senior unsecured notes.
- 2The offering included notes with a 7.375% coupon for secured debt due 2023 and a higher 10.500% coupon for unsecured debt due 2024.
- 3Proceeds from the debt offering are held in escrow, conditional upon the successful closing of the SanDisk acquisition.
- 4If the SanDisk acquisition fails to close by the specified 'Outside Date,' Western Digital is obligated to redeem all issued notes.
- 5The secured notes are secured by a first-priority lien on certain assets and are effectively senior to the unsecured notes.
- 6The indentures governing the notes contain restrictive covenants that will limit Western Digital's and its guarantors' ability to incur additional debt, pay dividends, sell assets, and make certain investments post-acquisition.
- 7A registration rights agreement mandates Western Digital to file a registration statement for an exchange offer of the unsecured notes within 365 days of issuance, with penalties for default.
Frequently Asked Questions
This filing reports the completion of a significant debt offering by Western Digital, totaling $5.225 billion, and details the terms of the senior secured and senior unsecured notes issued. It also highlights that the proceeds are held in escrow, pending the closing of the acquisition of SanDisk Corporation.
The escrowed funds will be released upon the consummation of the acquisition of SanDisk Corporation. If the acquisition does not close by a specified 'Outside Date,' Western Digital must redeem the notes.
If the SanDisk acquisition does not close by the stipulated deadline, Western Digital is required to redeem all the issued notes at 100% of their principal amount, plus accrued interest. This provides a safeguard for noteholders in case the acquisition falls through.
The senior secured notes are backed by a first-priority lien on specific assets and are effectively senior to the unsecured notes. Upon satisfaction of escrow conditions, they will become senior obligations of Western Digital, its guarantors, and SanDisk Technologies, Inc. The senior unsecured notes are effectively subordinated to secured indebtedness.