IFR 03.7.2020

International Financing Review March 7 2020 69

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Xerox adds banks to

US$24bn loan for HP bid

„ US Seven lenders now on financing

XEROX has added four banks to the US$24bn

financing backing its takeover bid for HP.

The amended and restated commitment letter

adds MUFG, PNC, Credit Agricole and SunTrust.

Citigroup, Mizuho and Bank of America were

the three original lenders that agreed to provide

a US$19.5bn senior unsecured 364-day capital

markets bridge facility and a US$4.5bn senior

unsecured 60-day cashflow bridge facility in January.

Citigroup, Mizuho, Bank of America, MUFG,

PNC, Credit Agricole and SunTrust are now joint

lead arrangers and bookrunners for the capital

markets bridge facility and the cashflow bridge

facility.

Pricing on the US$19.5bn bridge loan opens at

137.5bp over Libor and is linked to ratings.

For BBB+/Baa1/BBB+ or higher pricing is

112.5bp; for BBB/Baa2/BBB it is 125bp; for BBB-/

Baa3/BBB- it is 137.5bp; for BB+/Ba1/BB+ it is

162.5bp; and for BB/Ba2/BB or lower it is 200bp.

The bridge loan also pays duration fees of

50bp on borrowings outstanding at three, six,

nine and 12 months after the acquisition closes. It

also includes an extension fee of 50bp.

Pricing on the US$4.5bn cashflow bridge

opens at 125bp over Libor and is also linked to a

ratings grid.

For BBB+/Baa1/BBB+ or higher it pays 100bp;

for BBB/Baa2/BBB it is 112.5bp; for BBB-/Baa3/

BBB- it is 125bp; for BB+/Ba1/BB+ it is 150bp;

and for BB/Ba2/BB or lower it is 187.5bp. The

loan pays no duration fees.

The margins on both loans are subject to 25bp

step-ups on outstanding borrowings every three

months after closing.

On Thursday, HP rejected Xerox’s

raised takeover bid of about US$35bn,

saying it undervalued the personal computer

maker.

In February the printer maker increased

its offer by US$2 to US$24 per share, after its

previous buyout offers were rejected by the PC

maker for the same reason.

After Xerox raised its bid last month, HP said

it would implement a poison-pill plan to stop

investors from amassing more than 20% stake in

the company.

Daniela Guzman

9 IFR Loans 2323 p 63 - 76 .indd 69 06 / 03 / 2020 19 : 19 : 51