Tags: Seagate | Raise | 1.1 Billion | Loan | Debt | Sale

Seagate Looks to Raise $1.1 Billion From Loan, Debt Sale

Thursday, 09 Dec 2010 08:36 AM

Hard-disk-drive maker Seagate Technology PLC is looking to raise as much as $1.1 billion through a combination of a loan and the sale of some debt.

Seagate said Wednesday that it plans to sell $750 million in senior notes due in 2018 through a private placement. The Scotts Valley-based company had pegged the size of the debt offering at $500 million earlier in the day, but raised the amount after gauging the demand for notes that will pay an annual interest rate of 7.75 percent.

After paying commissions and other costs, Seagate expects to get $733 million from the debt offer. The company may use the proceeds to repay or buy back some of its outstanding debt.

The notes will be issued by Seagate HDD Cayman, which is a subsidiary of Seagate Technology and guaranteed by the company.

The company also said in a filing with the Securities and Exchange Commission that it is talking with several banks about setting up a corporate credit facility good for up to $350 million.

The financing announcements come after Seagate's decision in late November to end talks with private equity firms about taking the company private through a leveraged buyout. It said it felt the price offered was too low.

Instead, Seagate authorized the buyback of $2 billion worth of shares in an effort to keep its stockholders happy. The company plans to pay for the stock repurchases through a combination of its existing cash reserves, future cash flow from operations and potential alternative sources of financing such as its debt offering.

Seagate shares edged up 2 cents in Wednesday's extended trading after finishing the regular session at $15.07, down 9 cents.

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