Item 1.01 Entry into a Material Definitive Agreement.
Bridge Credit Facility to Support Tender Offer
As previously announced, on April 26, 2014, Image Sub Limited, a Cayman Islands
exempted company ("Sub"), entered into a Merger Agreement (the "Merger
Agreement") with Integrated Memory Logic Limited, a Cayman Islands exempted
company ("iML"), and a Tender Agreement with certain shareholders of iML (the
"Tender Agreement"). Also on April 26, 2014, Exar Corporation, a Delaware
corporation ("Exar") entered into a Parent Agreement with iML (the "Parent
Agreement") and a Guarantee Agreement with certain shareholders of iML (the
"Tender Agreement Guarantee"). Sub is a wholly owned subsidiary of Exar.
Pursuant to the Merger Agreement, Sub commenced a tender offer (the "Offer") to
acquire all of the outstanding ordinary shares of iML (the "Shares") at a price
of NT$91.00 per Share in cash.
On May 29, 2014, Sub completed the Offer. 68,319,091 Shares (the "Accepted
Shares") were validly tendered in the Offer, representing approximately 92% of
iML's outstanding Shares. The persons from whom the Accepted Shares were
acquired were the shareholders of iML. Sub will pay an aggregate purchase price
of NT$6,217,037,281 to iML shareholders for the tendered Shares.
On May 27, 2014 (the "Initial Funding Date"), Exar entered into a bridge credit
agreement (the "Credit Agreement") with the lenders party thereto (the
"Lenders"), and Stifel Financial Corp., as Administrative Agent (the
"Administrative Agent"). The Credit Agreement provides Exar with a bridge term
loan credit facility in an aggregate principal amount of up to $90 million (the
"Bridge Facility"). The proceeds of the Bridge Facility may be used to purchase
the Shares in connection with the Offer and the acquisition of iML and to pay
related fees and expenses. Exar may draw on the Bridge Facility up to 3 times
until the earliest to occur of (a) the date that is 200 days following the first
date on which all conditions precedent to the Offer have been satisfied and the
Offer has been consummated in accordance with the Merger Agreement, the Tender
Agreement and the other documents related to the acquisition of iML (the "Tender
Effective Date"), (b) the date on which the merger of Sub into iML (the
"Merger") is consummated pursuant to the Merger Agreement and (c) the date on
which the Lenders' commitments to advance funds to Exar otherwise terminates in
accordance with the Credit Agreement. As of the date hereof, Exar has drawn $65
million under the Bridge Facility.
The loans made under the Bridge Facility mature on the earliest to occur of (a)
the date that is 30 days after the consummation of the Merger, (b) if the Merger
has not occurred, the date that is 210 days following the Tender Effective Date
and (c) the date on which the loans made pursuant to the Bridge Facility are
declared due or otherwise become due and payable pursuant to the Credit
Agreement. The Credit Agreement also requires that the loans made under the
Bridge Facility be prepaid within 2 business days of Exar's actual receipt of
unrestricted cash and cash equivalents of iML.
Interest on loans made under the Bridge Facility accrues, at Exar's option, at a
rate per annum equal to (1) the Base Rate (as defined below) plus (a) during the
first 90 days following the Initial Funding Date, 7.5% and (b) thereafter, 8.5%
or (2) 1-month LIBOR plus (a) during the first 90 days following the Initial
Funding Date, 8.5% and (b) thereafter, 9.5%. The "Base Rate" is equal to, for
any day, a rate per annum equal to the highest of (a) the prime rate in effect
on such day, (b) the federal funds effective rate in effect on such day plus
0.50%, and (c) 1 month LIBOR plus 1.00%. The Base Rate is subject to a floor of
2.5%, and LIBOR is subject to a floor of 1.5%.
All obligations of Exar under the Credit Agreement are unconditionally
guaranteed by Exar's wholly-owned U.S. subsidiaries and by Image Sub Limited
(the "Guarantors") under the Guarantee and Collateral Agreement that was entered
into by Exar, the Guarantors and the Administrative Agent on the Initial Funding
Date (the "Guarantee and Collateral Agreement"). Pursuant to the Guarantee and
Collateral Agreement, the obligations of Exar and the Guarantors under the
Credit Agreement and the related guaranties are secured by a first priority
security interest in substantially all of the assets of Exar and the Guarantors,
except that the collateral excludes (a) the Shares until the Shares are removed
from the Taiwan Depository & Clearing Corporation's book-entry system and (b)
certain other specified assets of Exar and the Guarantors.
The Credit Agreement contains certain mandatory prepayments, representations and
warranties, affirmative covenants, negative covenants and conditions that are
customarily required for similar financings. The Credit Agreement contains
customary events of default including, but not limited to, the failure to make
payments of interest or principal under the Credit Agreement, the failure to
comply with the covenants and agreements specified in the Credit Agreement, the
failure to pay principal on certain other indebtedness, the acceleration of such
other indebtedness and certain events of insolvency. If any event of default
occurs, the principal, interest and any other monetary obligations on all the
then outstanding amounts under the Credit Agreement may become due and payable
The foregoing summary of each of the Merger Agreement, the Tender Agreement, the
Parent Agreement, the Tender Agreement Guarantee and the Credit Agreement (and
the Guarantee and Collateral Agreement) does not purport to be complete and is
. . .
Item 2.01 Completion of Acquisition or Disposition of Assets.
The entirety of Item 1.01 of this Current Report on Form 8-K, including without
limitation the description of the acquisition by Sub of the Accepted Shares and
the price and aggregate amount paid for the Accepted Shares, and the
descriptions of the Merger Agreement, the Tender Agreement, the Parent
Agreement, the Tender Guarantee Agreement and the Credit Agreement (including
the Guarantee and Collateral Agreement), is incorporated into this Item 2.01 of
this Current Report on Form 8-K by reference as if fully restated herein.
Pursuant to the terms and conditions set forth in the Merger Agreement, Sub
intends to conduct a second-step merger in which Sub will merge with and into
iML, and the remaining outstanding Shares will be converted into the right to
receive NT$91.00 per Share in cash. When complete, the gross transaction value
is currently estimated to be NT$6.8 billion (approximately US$224), or NT$2.8
billion (approximately US$92 million), net of cash acquired.
Exar financed the acquisition of the Shares with a combination of cash on hand
and borrowings under the Credit Agreement.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The disclosures required by this Item 2.03 of this Current Report on Form 8-K
are contained in Item 1.01 of this Current Report on Form 8-K, above, and are
incorporated herein by reference as if fully restated herein.
Item 8.01 Other Events.
On May 29, 2014
issued a press release relating to the consummation of the
Offer. A copy of the press release is attached as Exhibit 99.1 to this Form 8-K
and is incorporated herein by reference. The press release contains statements
intended as "forward-looking statements" that are subject to the cautionary
statements about forward-looking statements set forth in the press release.
Item 9.01 Financial Statements and Exhibits.
(a)-(b) All financial information required by this Item 9.01 of this Current
Report on Form 8-K in connection with the Offer and the acquisition of the
Shares will be filed by amendment to this Current Report on Form 8-K within
seventy-one (71) calendar days from the date that this Current Report on Form
8-K must be filed.
2.1 Form of Merger Agreement (incorporated by reference to Exhibit 2.1 to
Exar's Form 8-K filed on April 26, 2014)
2.2 Form of Tender Agreement (incorporated by reference to Exhibit 2.2 to
Exar's Form 8-K filed on April 26, 2014)
10.1 Bridge Credit Agreement, dated May 27, 2014 (including the Guarantee and
10.2 Form of Parent Agreement (incorporated by reference to Exhibit 10.1 to
Exar's Form 8-K filed on April 26, 2014)
10.3 Form of Tender Agreement Guaranty (incorporated by reference to Exhibit
10.2 to Exar's Form 8-K filed on April 26, 2014)
99.1 Press Release dated May 29, 2014