Subsequent Events (Notes)
|6 Months Ended|
Jun. 30, 2020
|Subsequent Events [Abstract]|
|Subsequent Events [Text Block]||Subsequent Event
Acquisition of Home Gateway Platform Division of Intel Corporation
On April 5, 2020, the Company entered into an asset purchase agreement with Intel Corporation, or Intel, under which the Company and its wholly owned Singapore subsidiary agreed to acquire certain assets and assume certain liabilities of the Home Gateway Platform Division of Intel Corporation, which the Company refers to as the WiFi and Broadband assets business, for a purchase price of $150.0 million in cash payable upon closing of the transaction. The Company intends to fund the transaction primarily with approximately $140.0 million of new transaction debt and approximately $10.0 million in cash from the Company’s balance sheet. The transaction is currently expected to close in the third quarter of 2020. The Company’s board of directors has unanimously approved the asset purchase agreement and the transactions contemplated thereby. During the six months ended June 30, 2020, the Company incurred $5.4 million in costs associated with the acquisition.
In connection with the asset purchase agreement, the Company entered into a debt commitment letter effective April 5, 2020 with certain initial lenders who have committed to provide a secured term loan facility in an aggregate principal amount of up to $140.0 million, subject to the satisfaction of certain customary closing conditions. The facilities are available to finance the acquisition and to pay fees and expenses incurred in connection therewith. The commitment letter provides that the term loan facility will have a -year term and that term loans will bear interest at either an Adjusted LIBOR plus a fixed applicable margin of 4.25% per annum or an Adjusted Base Rate plus a fixed applicable margin of 3.25% per annum, at our option. The incremental term loan facility will be subject to a financial covenant of an initial maximum total net leverage ratio of 3.5 to 1 which decreases to 3.0 to 1 beginning with the sixth full fiscal quarter ending after the close of the transaction. The definitive documentation governing the debt financing has not been finalized, and, accordingly, the actual terms may differ from the description of such terms in the commitment letter.
The consummation of the closing is not subject to a financing condition but is subject to customary conditions to closing, including the receipt of approval (or expiration of the waiting period) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, or HSR. On April 21, 2020, the U.S. Federal Trade Commission (FTC) granted early termination of the waiting period with respect to the pending acquisition. In addition, as required by local law in certain jurisdictions, Intel has initiated consultations on the proposed transaction with its relevant works councils, trade unions and other employee organizations. Either party may terminate the Purchase Agreement, subject to certain exceptions, (i) if the closing has not occurred by December 5, 2020 or (ii) if a legal restraint would prevent the consummation of the closing.
In connection with the transaction, MaxLinear and Intel have agreed to enter into, as of the closing, certain other ancillary agreements, including (i) an intellectual property matters agreement, pursuant to which Intel will grant to MaxLinear a license to certain intellectual property rights for use by MaxLinear in connection with the acquired assets and MaxLinear will grant back to Intel a license to the intellectual property rights in the acquired assets, (ii) a supply agreement, pursuant to which Intel will manufacture and fabricate certain products for MaxLinear that are part of the acquired assets, (iii) an ethernet network controller services agreement, pursuant to which MaxLinear will provide Intel with certain development services with respect to certain Intel ethernet network controller products, (iv) a transition services agreement, pursuant to which Intel will provide certain services on a transitional basis for up to a 12-month period after the closing, the scope of which includes services relating to real estate and facilities, information technology, and supply chain, procurement, sales operations, and engineering support, and (v) a side letter regarding the delayed transfer of certain inventory.
The entire disclosure for significant events or transactions that occurred after the balance sheet date through the date the financial statements were issued or the date the financial statements were available to be issued. Examples include: the sale of a capital stock issue, purchase of a business, settlement of litigation, catastrophic loss, significant foreign exchange rate changes, loans to insiders or affiliates, and transactions not in the ordinary course of business.
Reference 1: http://www.xbrl.org/2003/role/disclosureRef