Qualcomm Inc. told securities regulators Nov. 29 that it arranged $2 billion in letters of credit with four banks to help with its acquisition of Netherlands-based NXP Semiconductors N.V.
The majority of the lenders are Japanese.
Specifically, Qualcomm (Nasdaq: QCOM) announced a standby letter of credit with Mizuho Bank Ltd. for $750 million; a standby letter of credit with the Bank of Tokyo-Mitsubishi UFJ Ltd. for $700 million; a standby letter for credit from Sumitomo Mitsui Banking Corp. (aka SMBC) for $500 million; and a standby letter of credit from Bank of America N.A. for $50 million.
In late October, Qualcomm announced a plan to broaden its semiconductor business by buying NXP. The deal, including the assumption of NXP’s debt, is expected to cost Qualcomm $47 billion. On Nov. 18, Qualcomm announced a cash tender offer for all NXP shares for $110 per share.
Acquiring letters of credit was another step in the buying process.
“Pursuant to the terms of each letter of credit, NXP will have the right to draw amounts to fund certain termination compensation owed under the purchase agreement, if any, or to satisfy any damages judgment, decision or award of a governmental authority pursuant to which Qualcomm River Holdings would be obligated to pay amounts to NXP pursuant to the terms of the purchase agreement, if any,” Qualcomm’s lawyers said in a securities filing.
Qualcomm River Holdings is an Amsterdam-based corporate entity that Qualcomm set up to buy NXP.
Government regulators still need to approve the acquisition.
