Broadcom will get financial backing of USD 6.5 billion for its acquisition of Brocade, provided by six banks, Reuters reported, citing sources familiar with the matter. Bank of America Merrill Lynch (BAML), Deutsche Bank, Barclays, Bank of Montreal, Citigroup and Credit Suisse have signed on to the 364-day unsecured bridge loan. The banks will hold the loan until the bridge is replaced with permanent financing by April 2017, the expected closing of the merger, the sources added. The final capital structure will depend on the corporate ratings the company receives by then, and whether it is upgraded to investment grade.
Moody’s Investors Service has Broadcom at Ba1 with a positive outlook, while S&P has the company at BB+, only one rating below investment grade. Following the acquisition, Fitch assigned a BBB- rating to Broadcom, the first investment grade ratings tier. Banks stand to earn USD 25-35 million on the bridge, according to Freeman Consulting Services.
