Business Context and Reporting Period
This Form 8-K, dated November 4, 2019, reports that Broadcom Inc. completed the acquisition of Symantec Corporation's Enterprise Security business on the Effective Date. The transaction was originally announced on August 8, 2019, via an Asset Purchase Agreement.
Key Financial Metrics and Transaction Details
- Acquisition Consideration: Approximately $10.7 billion in cash.
- Financing Structure: Broadcom entered into a Credit Agreement providing $15.50 billion in aggregate term loan commitments.
- Facility Breakdown:
- $7.75 billion unsecured Term A-3 Facility (maturing in 3 years).
- $7.75 billion unsecured Term A-5 Facility (maturing in 5 years).
- Initial Borrowing: $12.0 billion borrowed ratably on the Effective Date to fund the acquisition, working capital, and related costs.
- Future Borrowing Intent: Remaining commitments are intended to refinance $750 million of CA, Inc. Senior Notes due December 2019 and $2.75 billion of Broadcom Technologies Inc./Broadcom Corporation Senior Notes due January 2020.
- Financial Covenant: Consolidated Interest Coverage Ratio must not be less than 3.00:1.00 as of the last day of each fiscal quarter.
Material Changes
The primary material change is the completion of the Symantec Enterprise Security acquisition and the simultaneous incurrence of significant new debt obligations. The company has increased its leverage to fund the $10.7 billion cash purchase, utilizing a new $15.5 billion credit facility.
Outlook, Risks, and Contingencies
- Delayed Closings: The acquisition is subject to delayed closings in certain non-U.S. jurisdictions.
- Debt Refinancing: The company plans to use remaining credit commitments to refinance existing senior notes maturing in late 2019 and early 2020.
- Covenants and Defaults: The Credit Agreement includes standard events of default, including nonpayment, breach of covenant, bankruptcy, and change of control.
- Financial Reporting: Financial statements of the acquired business and pro forma financial information are not included in this filing and will be filed by amendment within 71 days.
Investor Verification Checklist
- Verify the final closing status in non-U.S. jurisdictions where delayed closings apply.
- Confirm the execution of the refinancing for the $750 million CA, Inc. notes and $2.75 billion Broadcom notes using the remaining credit facility.
- Monitor the upcoming filing (within 71 days) for the acquired business's financial statements and pro forma information.
- Review the full text of the Credit Agreement (Exhibit 10.1) for detailed covenant definitions and interest rate calculations.