Irvine-based drive maker Western Digital Corp. used a big financial package through Bank of America to cover a portion of its $4.8 billion acquisition for Hitachi Global Storage Technologies Inc.
The company finalized a $2.3 billion loan agreement from the Charlotte, N.C.-based bank on March 8, the closing date of the transaction, and an additional $500 million revolving credit line, according to filings with the Securities and Exchange Commission.
Western Digital said it may expand the credit line by an additional $500 million and has tagged proceeds for working capital, possible acquisitions and other corporate purposes.
The loan term is five years and requires quarterly principal payments of $57.5 million over 20 quarters, with $1.15 billion due at maturity and no penalty for early payment.
The loan will carry an interest rate mirroring the London Interbank Offered Rate—the average interest rate banks loan to each other—plus 2%.
The $4.8 billion purchase price also included 25 million shares of Western Digital common stock priced on March 7 for a total $900 million.
Meantime, the non-stock portion of the deal increased almost $400 million, as purchase agreement provisions and Hitachi GST pension obligations upped the ante.
About $1 billion or more of the total came from Western Digital’s cash reserves.
Western Digital generated $378 million in cash from operations during the December quarter and ended 2011 with cash and investments worth about $3.9 billion.
Western Digital’s priciest acquisition to date took exactly a year to finalize, as antitrust concerns from U.S. and international regulators threatened to derail the acquisition until Western Digital agreed to concessions. It sold off its business of 3.5-inch hard disk drives to Toshiba Corp. days before finalizing the Hitachi buy, clearing the major regulatory hurdle.
The divestiture also included the transfer or licensing of intellectual property rights, the transfer of personnel, and supply of certain disk drive components.
Western Digital acquired Toshiba Storage Device Co. in Thailand as part of the deal. Toshiba Storage hasn’t regained its hard drive manufacturing operation since heavy flooding late last year damaged many regions in the country.
$2M for Startup
A Newport Beach startup has raised $2 million from Silicon Valley investors and introduced an application for the iPad that allows users to sign documents and get other signatures remotely.
SignNow attracted the Series A funding from Menlo Park-based Khosla Ventures and will use the proceeds for product development, according to Chief Executive Chris Hawkins, who co-founded the company in 2010.
SignNow aims to eliminate the need for fax machines, scanners and printers, simplify the notary process and reduce fraud in documentation on real estate transactions, legal documents and other forms.
“This is a big problem,” said Hawkins, a former information technology consultant who recently returned to Orange County after a stint in the Army.
The free software program is available on smart phones, online and now tablets.
The company plans eventually to charge customers for premium services such as linking up a notary through a Web cam or finding attorney’s to sign off on certain documents instantly.
“We’re really trying to find out the best distribution model,” Hawkins said.
The company employs 11 full-time workers, mostly engineers, and a few contractors.
Older Prospects
Maybe Irvine-based Blizzard Entertainment Inc. should start marketing its flagship game to older adults to replace the droves of younger gamers who dropped subscriptions the last two quarters.
A new study from North Carolina State University that tested 39 adults between the ages 60 and 77 found that playing World of Warcraft for an hour a day improved cognitive functions, including spatial ability, memory and attention focus compared to a controlled group.
Those who scored the worst in initial testing showed the most improvement, according to the study published online last month by Computers in Human Behavior.
It’s billed to be the first study to decipher the benefits of online role-playing games on seniors’ mental health.
Blizzard, the county’s biggest software maker, has gone through a rough stretch the last six months.
The Business Journal in late February reported it planned to cut 600 employees from its global operation, or about 8% of companywide employment.
The company lost more than 900,000 World of Warcraft subscribers the last two quarters and dropped its plan to release three games in 2012, revising its forecast to two game launches.
In January Blizzard announced it would skip its regular fan event BlizzCon this year, held at the Anaheim Convention Center.
