TECH Semiconductor Singapore is paying a visit to the loan markets after two years with a $400 million facility. Mandated arrangers ABN AMRO, DBS Bank, OCBC and SSB/Citi have launched the facility into sub-underwriting earlier this week. The facility comprises of a $150 million revolving credit and a $250 million term loan.
The tenor of the facility is 3.5 years with a blended average life of 2.8 years. The availability period for the term loan is 12 months, while the revolving credit will be available throughout the tenor of the facility. General syndication is slated for the second week of October following the close of sub-underwriting, while the signing of the loan is expected to take place in mid-November.
The margin on the facility is 165bp over Sibor. Banks joining the transaction in the sub-underwriting stage with commitments of $40 million or more receive an underwriting fee of 30bp and a management fee of 70bp with all-in fees amounting to slightly over 200bp. There is also a commitment fee of 50bp payable to the lenders in the event that the borrower does not draw upon the facility during the availability period.
Proceeds from the facility will be utilized for working capital and part refinancing of an existing facility. That facility, also of a similar tenor and a size of $425 million, was tapped in September 2000 at a spread of 137.5bp over Libor. TECH Semiconductor is clearly paying more this time to compensate banks willing to extend credit facilities that will be crucial for a company involved in the DRAM business that is still in its recovery stage.
TECH Semiconductor is a frequent visitor to the loan markets and this transaction marks its fifth borrowing in the syndicated loan markets. TECH Semiconductor is an unlisted company and is a joint venture founded in 1991 between Micron Technology of US (39%), Singapore's Economic Development Board (30%), Canon Inc. (21%) and Hewlett-Packard (10%). The chip-maker has two plants in Singapore producing 256-megabit DRAM chips on 200MM wafers under the Micron brand name. Micron takes up the entire production of the two factories.
Micron is putting up a $50 million security as comfort to lenders on the transaction to cover for principal and interest payments in the event of default by the borrower.