S&P: Dell unchanged on upsizing

S&P said the BBB- rating and 2 recovery rating on Dell International LLC’s senior secured notes are unchanged following news that the company is upsizing its proposed senior secured notes by $4 billion to an aggregate amount of $20 billion.

The 2 recovery rating indicates 70% to 90% expected default recovery.

EMC Corp., Diamond 1 Finance Corp. and Diamond 2 Finance Corp. are co-issuers of the senior secured notes.

The proceeds will be used to partially fund its acquisition of EMC, which is expected to close by October 2016, the agency said.

As part of this transaction, Dell also announced that its total debt issuance to fund the acquisition will not change, S&P said.

The company plans to reduce its senior secured term loan A-1 facility to $3.2 billion, its senior secured term loan A-3 facility to $1.8 billion and its senior secured term loan B facility to $5 billion, the agency said.

The ratings also consider Dell’s satisfactory business risk profile and significant financial risk profile, S&P said.

After the transaction, the company’s debt leverage is expected to be about 4x, then decline to the low- to mid-3x range by year-end January 2018, the agency said.

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