Western Digital Announces Successful Repricing of €885 Million of Euro Term B Loans

23 Sep

Western Digital Corporation today announced that it has successfully repriced €885 million of new Euro-denominated term B loans at an interest rate of Euribor + 3.25%, which priced 200 basis points lower than its previous Euro-denominated term B loans borrowed earlier this year in connection with the company’s acquisition of SanDisk Corporation. In connection with this transaction, Western Digital settled the previous Euro-denominated term B loans with the proceeds of this new financing. The terms of the new financing are expected to generate total annual interest savings of approximately $23 million beginning on Sept. 22, 2016. This reflects annual cash interest savings of approximately $20 million resulting from the 200 basis point reduction in interest spread as well as annual non-cash interest savings of approximately $3 million from reduced amortization of debt issuance costs associated with the previous Euro-denominated term B loans. The company expects to incur a debt extinguishment charge of approximately $37 million as a result of this transaction, which will be recorded in the September 2016 quarter. The new term loans have the same remaining tenor as the previous Euro-denominated term B loans and mature on April 29, 2023.

The new financing follows the company’s successful pricing of $3.0 billion of new USD Term B-1 loans that, along with a voluntary prepayment of $750 million, replaced its previous USD Term B loans on Aug. 17, 2016. In combination with today’s financing, the aggregate annual interest savings that the two transactions are expected to generate is approximately $151 million beginning in the September 2016 quarter. This reflects annual cash interest savings of approximately $120 million.