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Overview

Bank of China contributes to $900 million USD syndicated loan to Brocade Communications Systems for the acquisition of Ruckus Wireless and general corporate purposes in 2016

Commitments (Constant USD, 2023)$65,443,294
Commitment Year•2016Country of Activity•United StatesDirect Recipient Country of Incorporation•United StatesOverseas Jurisdiction•United StatesSector•CommunicationsFlow Type•Loan

Status

Project lifecycle

Completion

Pipeline: PledgePipeline: CommitmentImplementationCompletion

Timeline

Key dates

Commitment date
May 27, 2016
Start (actual)
May 27, 2016
End (actual)
May 27, 2016
Last repayment (originally scheduled)
May 26, 2021

Stakeholders

Organizations involved in projects and activities supported by financial and in-kind transfers from Chinese government and state-owned entities

Ultimate beneficial owners

At least 25% host country ownership

Funding agencies

State-owned Commercial Banks

  • Bank of China (BOC)

Cofinancing agencies

Private Sector

  • Bank of the West
  • BBVA USA (formerly BBVA Compass or Compass Bank, now PNC Financial Services)
  • Deutsche Bank AG
  • Fifth Third Bank
  • HSBC Bank USA, N.A.
  • KeyBank National Association
  • MUFG Bank, Ltd. (Formerly Bank of Tokyo-Mitsubishi UFJ, Ltd. (BTMU))
  • PNC Bank, National Association
  • SunTrust Bank
  • TD Bank, N.A.
  • The Northern Trust Company
  • U.S. Bank National Association
  • Wells Fargo Bank N.A.

State-owned Banks

  • Taiwan Cooperative Bank

Receiving agencies

Private Sector

  • Brocade Communications Systems, Inc.

Loan description

Bank of China contributes to USD 900 million syndicated loan credit to Brocade Communications Systems for the acquisition of Ruckus Wireless and general corporate purposes in 2016

Interest rate (t₀)•2.1781%Interest type•Variable Interest RateMaturity•5 years

Narrative

Full Description

Project narrative

On May 27, 2016, financial close was reached on a deal in which a syndicate of 15 banks — including the New York Branch of the Bank of China (BOC) — entered into a $900 million USD syndicated loan agreement with Brocade Communications Systems, a San Jose, California-based data and storage networking company. The loan carried a maturity of five years, and the interest rate was LIBOR plus an applicable margin. $100 million USD was for a revolving credit facility (RCF) and $800 million USD was for a term loan. The use of proceeds of the term loan was for the acquisition of all issued and outstanding shares of the common stock of Ruckus Wireless, a Sunnyvale, California-based company listed on the New York Stock Exchange providing wireless services such as Wi-Fi platforms, for $6.45 USD in cash and 0.75 of Brocade common stock each, which was completed on May 27, 2016. The RCF was for ongoing working capital requirements and general corporate purposes. In addition to BOC, the following lenders also participated: Wells Fargo Bank, National Association; Deutsche Bank AG; SunTrust Bank; Bank of the West; U.S. Bank National Association; MUFG Bank, Ltd.; Compass Bank; Fifth Third Bank; PNC Bank National Association; TD Bank, N.A.; HSBC Bank USA N.A.; KeyBank National Association; The Northern Trust Company; and Taiwan Cooperative Bank, Ltd.

Staff comments

1. The entirety of the 2016 loan contract can be accessed at https://investors.broadcom.com/node/32976/html. The dropbox link is accessible here: https://www.dropbox.com/scl/fi/rc4hfrjzqqgicfllezybv/Source_ID_216063.pdf?rlkey=jp51yx4xfafovzv2hl2x8hyva&st=59koxtyl&dl=0 2. Brocade Communications Systems was an American technology company specializing in data and storage networking products, including fibre channel storage area network (SAN) switches. Headquartered in San Jose, California, the company was acquired by Broadcom Inc. in 2017. 3. AidData estimates the interest rate by adding the 6-month average LIBOR rate in May 2016 and an applicable margin based on total leverage ratio (1.75%). 4. The individual contributions of the 15 lenders to this $900 million USD syndicated loan are unknown. For the time being, AidData has estimated the contribution of Bank of China by assuming that each lender contributed an equal amount ($60,000,000 USD) to the loan syndicate.