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  1. #1
    WHT-BR Top Member
    Data de Ingresso
    Dec 2010

    [EN] Dell/EMC deal hung up on financing

    Dell hits snag in bid to raise $45B to finance EMC deal

    By Josh Kosman
    February 11, 2016

    Dell is off to a rocky start in its bid to raise $45 billion for the biggest tech deal in history.

    The Round Rock, Texas-based computer giant was expected Wednesday to price the first $10 billion chunk of debt it needs to finance the $67 billion buyout of data storage company EMC.

    But the JPMorgan-led group of banks working on the debt deal will need another 10 days to get it done because tighter credit markets are making the loans harder to sell, said a source.

    Meanwhile, the steep downturn in technology stocks is also taking its toll. Dell is trying to sell its Perot Systems business for up to $5 billion to lighten its EMC debtload.

    French tech company Atos — which was seen as the front-runner to acquire Perot — dropped out of the auction in the last week, following a sharp drop in its stock price, a source said.

    With the loss of Atos, there are two suitors for Perot. India’s Tata and Japan’s NTT Data are reportedly in the auction. Dell is still hoping to announce the Perot sale in a few weeks, the source said.

    Investors are increasingly jittery about the EMC deal. Dell execs keep insisting the purchase will close by October — despite concerns about the sheer debt, the complexity of the transaction and getting regulatory approval.

    If Dell can’t complete the deal, the closely held company is on the hook for a $4 billion breakup fee. Founder and CEO Michael Dell, along with a group of private equity investors, took the company private in 2013 after battling shareholders.

    Dell didn’t respond to a request for comment.

    The deal calls for EMC shareholders to get $24.05 per share in cash, plus a VMware tracking stock that will fluctuate with that company’s share price.

    When they announced the deal, the total value per EMC share was $33.15, but with the sharp drop in tech stocks, that’s no longer the case.

    EMC shares were down 1.3 percent, at $24.22, in Thursday afternoon trading.

  2. #2
    WHT-BR Top Member
    Data de Ingresso
    Dec 2010

    Dell's $10 billion loans for EMC buy stall

    Michelle Sierra
    Thu Feb 11, 2016

    The commitment deadline on $10 billion of pro-rata loans in a $45 billion financing package backing computer giant Dell’s purchase of data storage products maker EMC Corp has been extended due to a slow order book, a source close to the transaction said.

    The Chinese New Year, which delayed approval of requests from foreign banks' home offices to participate in the financing, was the main reason for extending the original February 10 deadline, the source said.

    Pro rata loans are primarily sold to banks, and Asian and European lenders are an important component.

    "Asian banks -- Chinese and Taiwanese -- they have balance sheets and an ancillary connection with Dell and EMC," a banker following the transaction said, adding documentation delays are not uncommon at this point of the marketing process.

    The pro-rata syndication is now not anticipated to close until at least February 15.

    Sinking oil prices, an equity sell-off and increased dollar funding costs are making it more expensive for some banks to lend and were expected to make Dell’s pro-rata loans a tougher-than-expected sell.

    “Am I worried? Of course, I’m worried," a banker close to the transaction told Thomson Reuters LPC after the loans launched to investors two weeks ago.

    The loans are testing banks’ appetite for funded U.S. dollar assets before tapping the institutional loan and high-yield bond markets.

    The sheer size of the pro-rata loans was expected to make the deal challenging. Dell is the second largest pro-rata financing to date behind a $13.9 billion pro-rata package from July 2015 that backed Canada Pension Plan Investment Board’s acquisition of Antares Capital from General Electric Capital Corp.

    Industry concentration was also expected to bring challenges. The heavy issuance in the tech space last year could limit investor interest in the credit.

    Dell’s $10 billion pro-rata loans include a $3.5 billion three-year term loan, a $3.5 billion five-year term loan and a $3 billion five-year revolving credit facility.

    The loan package also includes an $8 billion seven-year Term Loan B that will be sold to institutional investors and $25 billion of high-yield bonds, both of which will come to the market before the acquisition is scheduled to close in August.

    Bankers seeking to boost demand priced the revolving credit facility at 37.5 basis points undrawn and 200 basis points over Libor drawn, while the three-year term loan pays 200 basis points over Libor and the five-year pays 225 basis points over Libor.

    “It’s priced to sell,” another banker said.

    The JP Morgan-led loans launched to bank investors in New York on January 27.

    Other underwriting banks are Barclays, Bank of America Merrill Lynch, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs and RBC Capital Markets.

    Even if the deal takes longer to sell, Dell’s strong enterprise-oriented business model, the credit quality of the name (expected corporate ratings Ba1/BB+, expected debt ratings Baa3/BBB), and a focus on paying down debt are seen encouraging banks to absorb the pro-rata loans.

  3. #3
    WHT-BR Top Member
    Data de Ingresso
    Dec 2010

    Dell: 'Significant consolidation' on the cards

    Michael Dell tells employees that media reports suggesting EMC deal could fall through are just "click bait."

    Hannah Breeze
    12 February 2016

    Michael Dell has said that even more "significant consolidation" could be on the cards in the tech space, hinting that his firm could continue its shopping spree.

    Dell is in the midst of a mega-deal to acquire EMC for $67bn, which is expected to close some time between May and October.

    Speaking at the company's FY17 Field Readiness Seminar (FRS), a transcript of which has been filed with the Securities and Exchange Commission, Michael Dell told staff that the EMC deal might not be a one-off in the industry.

    "Customers need a trusted partner in this journey, in navigating this period of incredible change; and we will be the best partner for companies and organizations of all sizes," he said.

    "Customers face a real challenge in funding the digital transformation, and what they have to do is make the existing infrastructure more efficient to be able to fund the digital transformation, and we're going to help them do exactly that. During this period, I also expect there to be significant consolidation. And we're very well positioned to be a consolidator."

    Elsewhere at the FRS event, Dell urged his staff not to pay attention to media reports suggesting the EMC deal could fall through, branding such articles "click bait".

    "You may have read a story that questions if this deal is going to happen. If you have, you're wasting your time," he said.

    "The media business is under a lot of stress and their business model is sort of cratering. And what they do to survive in those tough times is they create something called click bait. They create an inflammatory headline – so and so was impregnated by aliens, or whatever, click on here to read about this story, see some ads, try to get some money. So don't fall for that, OK?

    "There's going to be those kind of stories, just like there was during the privatization. Do you all remember when we were going private there were all kind of stories and they basically turned out to be nonsense? So don't waste your time with that."

    He added that his company is "absolutely" going ahead with the deal according to the original timeline and terms "at full speed ahead".

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