Item 2.01. Completion of Acquisition or Disposition of Assets
As previously disclosed on February 13, 2017, Integrated Device Technology, Inc., a Delaware corporation (
IDT
), Glider Merger
Sub, Inc., a Delaware corporation and wholly-owned subsidiary of IDT (
Purchaser
), and GigPeak, Inc., a Delaware corporation (
GigPeak
), entered into a definitive Agreement and Plan of Merger (the
Merger Agreement
).
Pursuant to the Merger Agreement, Purchaser commenced a tender offer (the
Offer
)
to acquire all of the outstanding shares of GigPeaks common stock, par value $0.001 per share, including the associated purchase rights for Series A Junior Preferred Stock of GigPeak (the
Rights
) issued under the
Rights Agreement, dated as of December 16, 2014, as amended, between GigPeak and American Stock Transfer & Trust Company, LLC, as rights agent (such Rights, together with the common stock, the
Shares
), at a
price of $3.08 per share in cash (the
Offer Price
), without interest and subject to any applicable withholding taxes, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated March 7, 2017
and the related Letter of Transmittal (which, together with the Offer to Purchase, constituted the
Offer
).
The Offer expired at
one minute following 11:59 P.M. (12:00 midnight) New York City time, on Monday, April 3, 2017. American Stock Transfer & Trust Company, LLC, the depositary for the Offer (the
Depositary
), advised IDT and
GigPeak that, as of the expiration of the Offer, a total of 54,454,085 Shares had been validly tendered and not validly withdrawn pursuant to the Offer, representing approximately 80.42% of the GigPeaks then outstanding Shares and 67.84% of
GigPeaks then outstanding Shares (determined on a fully diluted basis). The Minimum Condition (as defined in the Merger Agreement) for the Offer was satisfied because the number of Shares validly tendered and not withdrawn pursuant to the
Offer constituted a majority of the Shares then outstanding (determined on a fully diluted basis) and a majority of the voting power of the Shares then outstanding (determined on a fully diluted basis) and entitled to vote upon the adoption of the
Merger Agreement and approval of the Merger (excluding from the number of tendered Shares, but not from the number of outstanding Shares, Shares tendered pursuant to guaranteed delivery procedures (to the extent such procedures are permitted by the
Purchaser) that have not yet been delivered in settlement or satisfaction of such guarantee). All other conditions to the Offer having also been satisfied, Purchaser accepted all of the Shares for payment. IDT will provide Purchaser with sufficient
funds to promptly pay for all Shares validly tendered in the Offer and not validly withdrawn.
Following consummation of the Offer, all conditions to the
Merger (as defined below) set forth in the Merger Agreement had been satisfied or waived, and on April 4, 2017, upon the filing of a certificate of merger with the Secretary of State of the State of Delaware (the
Effective
Time
), IDT completed its acquisition of GigPeak by consummating a merger of Purchaser with and into GigPeak (the
Merger
) without a meeting of the stockholders of IDT or GigPeak in accordance with
Section 251(h) of the General Corporation Law of the State of Delaware (the
DGCL
). As a result of the Merger, GigPeak became a wholly owned subsidiary of IDT. Pursuant to the Merger Agreement, each Share issued and
outstanding immediately prior to the Effective Time, other than any Shares (i) that are owned by or held in the treasury of GigPeak, or owned by IDT or any direct or indirect wholly-owned subsidiaries of IDT or GigPeak or (ii) in respect
of which appraisal rights were perfected in accordance with Section 262 of the General Corporation Law of the State of Delaware, was converted into the right to receive an amount in cash equal to the Offer Price without interest and subject to
any applicable withholding taxes.
The aggregate amount paid by Purchaser in the Offer and Merger was approximately $250 million. IDT provided
Purchaser with sufficient funds to purchase all Shares validly tendered in the Offer and not validly withdrawn and to make payments in respect of the remaining Shares upon their conversion in the Merger and in respect of outstanding options to
acquire Shares and restricted stock units.
IDT funded the acquisition of the Shares in the Offer and the Merger from its available cash on hand and net
proceeds from borrowings under its credit facility entered into on April 4, 2017 with JPMorgan Chase Bank, N.A. (
JPMorgan
) as administrative agent and the various lenders signatory thereto (the
Credit
Agreement
).
The Credit Agreement provides for a $200 million term loan facility (the
Initial Term
Loans
). In addition, the Company may request incremental term loan and/or incremental revolving loan commitments in an aggregate amount not to exceed the sum of $200 million and an unlimited amount that is subject to pro forma
compliance with certain secured leverage ratio tests; provided, however, that incremental revolving loan commitments may not exceed $50 million. In addition to funding a portion of the amount paid by Purchase in the Offer, the Company may use
the proceeds of the loan to pay off GigPeaks existing credit facility with Silicon Valley Bank, pay fees and expenses incurred in connection with the Offer and the Merger and for working capital and general corporate purposes.
At the Companys election, Initial Term Loans under the Credit Agreement may also be made as either base rate loans or Eurodollar loans. The applicable
margin for base rate loans is 2.00% and the applicable margin for Eurodollar loans is 3.00%. All Eurodollar loans are subject to a floor of 0.00%. The Company also agrees to pay other closing fees, arrangement fees and administration fees.
The commitments under the Credit Agreement will terminate, and all outstanding amounts thereunder will be due and payable, on the earliest of
(w) April 4, 2024, (x) the date of termination of the commitments by the Company, (y) in connection with an exercise of remedies after the occurrence of an event of default, and (z) August 16, 2022 if any existing
convertible notes are outstanding on August 16, 2022 and the maturity date thereof had not otherwise been extended to a date that is no earlier than 91 days after April 4, 2024, unless the Company and the guarantors shall have cash,
permitted investments and/or undrawn revolving credit commitments (or other commitments on terms reasonably satisfactory to the administrative agent from financial institutions reasonably satisfactory to the administrative agent) in an aggregate
amount not less than the aggregate principal amount of the then outstanding existing convertible notes. The Company may prepay the Initial Term Loan, in whole or in part, at any time without premium or penalty, subject to certain conditions, and
amounts repaid or prepaid may not be reborrowed.
The Companys obligations under the Credit Agreement are required to be guaranteed by certain of
its subsidiaries meeting certain thresholds set forth in the Credit Agreement and are secured by substantially all of the tangible and intangible assets of the Company and the guarantors, including by a pledge of 100% of the equity interests of the
domestic subsidiaries of the Company and guarantors and 65% of the equity interests of the first-tier foreign subsidiaries of the Company and the guarantors.
The Credit Agreement contains customary affirmative and negative covenants, including covenants that limit or restrict the Company and its subsidiaries
ability to, among other things, incur indebtedness, grant liens, merge or consolidate, dispose of assets, make investments, make acquisitions, enter into transactions with affiliates, pay dividends or make distributions and repurchase stock. The
Credit Agreement includes customary events of default, including among others, nonpayment of principal or interest, material inaccuracy of representations and failure to comply with covenants. Under certain circumstances, a default interest rate
will apply on all overdue obligations under the Credit Agreement at a per annum rate equal to 2.00% above the applicable interest rate for any overdue principal and 2.00% above the rate applicable for base rate loans for any other overdue amounts.
The occurrence of an event of default could result in the acceleration of obligations under the Credit Agreement.
Certain of the lenders and their
affiliates have engaged in, and may in the future engage in, investment banking and other commercial dealings in the ordinary course of business with the Company or its affiliates. They have received, or may in the future receive, customary fees and
commissions for these transactions.
The foregoing summary of the Merger Agreement, the transactions contemplated thereby and the Credit Agreement does
not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Merger Agreement furnished as Exhibit 2.1 to the Current Report on
Form 8-K
filed by IDT on
February 13, 2017 and the full text of the Credit Agreement furnished as Exhibit (b)(2) to IDTs Schedule TO/A dated April 4, 2017, each of which is incorporated herein by reference.