Seagate Buyout

March, 2000

Seagate Buyout 1
 Seagate
• Largest of six major suppliers of disk
drives
Table A Market Share in the Worldwide Disk Drive Industry,
1999

Total Marketa Enterprise Desktop

Number of units
shipped
Seagate 21.1% 41.0% 21.1%
Quantum 17.1 7.2 20.5
IBM 14.0 34.6 6.1
Maxtor 13.3 b 17.7
Fujitsu 12.3 8.8 12.4
Western Digital 11.1 3.8 14.6
Samsung 5.9 b 7.5

Total sales ($millions) $25,273 $7,438 $14,627

Source: “Disk Drive Quarterly Report” (March 2000) by

Salomon Smith Barney.
aIncludes mobile.
bAmount is not material.

Seagate Buyout 2
 Disk Drive Market: 90’s
• 1992-1999 average unit sales growth of
22.6%
• 1992-1999 average revenue growth of 1%

Exhibit 1 Worldwide Hard Disk Drive Industry Historical Performance and Projections, 1991-2003E

90's
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000E 2001E 2002E 2003E average

Total Sales (000s of

units) 33.1 38.4 51.8 69.0 90.0 106.8 129.3 143.6 165.9 187.8 212.5 238.1 268.2
Y/Y % Change 16.0% 34.9% 33.2% 30.4% 18.7% 21.0% 11.1% 15.5% 13.2% 13.1% 12.1% 12.6% 22.6%

Total Revenues (millions

of $) $24,300 $26,200 $21,730 $22,966 $22,991 $27,596 $27,340 $25,483 $25,273 $26,640 $28,409 $30,450 $32,699
Y/Y % Change 7.8% -17.1% 5.7% 0.1% 20.0% -0.9% -6.8% -0.8% 5.4% 6.6% 7.2% 7.4% 1.0%

Seagate Buyout 3
 Seagate: ‘90’s
• ’92-’99 Average revenue growth of 15.9%
– ‘92-’99 average industry revenue growth of
1%
• ’90’s Average EBIT margin of 6.7%
– ‘92-’99 average industry median EBIT margin
of 2.6%
Seagate
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 Average
Sales ($ million) 2413 2677 2875 3044 3500 4540 8588 8940 6819 6802
% Growth 10.9% 7.4% 5.9% 15.0% 29.7% 89.2% 4.1% -23.7% -0.2% 15.9%

EBIT ($Million) 179 117 140 284 311 443 627 1020 -138 398
% Sales 7.40% 4.40% 4.90% 9.30% 8.90% 9.80% 7.30% 11.40% -2.00% 5.90% 6.7%

Disk Drive Industry

Medians
EBIT as % of Sales 5.9% 4.3% 5.9% -0.3% -2.4% 1.9% 3.9% 7.5% -1.4% 1.1% 2.6%

From Exhibit 2 Seagate Buyout 4

 Seagate
• Higher than industry average sales growth
and EBIT margins
– Regarded as an efficient low-cost producer
• Volatile Revenues
– 6-12 month product cycle
• Requires frequent access to capital to finance new
products
– Reduced industry demand for disk drives
during the early 1990’s and 1997-8
• Seagate fared better than other firms because of
diversified product mix
Seagate Buyout 5
 Seagate
• Vertically integrated (case p. 4)
– Unique in industry
– Designed and manufactured components as
well as assembling
• Gave Seagate the ability to more quickly respond
to changes in demand and general economic
conditions
• Requires high R&D expenditures

Seagate Buyout 6
 Seagate
• Restructured in late ‘90s
– New CEO in 1998
– Expected increases in Cap Ex and R&D
• Requires easy access to capital markets to raise
funds
– Could be made more difficult with high leverage resulting
from an LBO

Seagate Buyout 7
 Seagate and Industry
Capital Structure
From Exhibit 2

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 Average

Seagate

Debt/Book Assets 31% 23% 18% 14% 19% 16% 15% 10% 12% 10% 16.8%
Debt/Mkt. Assets 28% 27% 16% 14% 18% 12% 11% 6% 8% 8% 14.8%
(Debt-Cash)/Book Assets 17% 9% -10% -17% -27% -21% -7% -24% -20% -13% -11.3%
(Debt-Cash)/Market Assets 15% 11% -9% -17% -26% -15% -5% -13% -13% -10% -8.2%
EBITDA Interest Coverage 6.10 6.01 9.09 18.67 17.05 19.11 17.99 43.66 8.84 20.25 17
EBIT Interest Coverage 3.68 2.76 4.11 12.08 11.81 13.44 11.24 29.27 -2.71 8.29 9

Disk Drive Industry Medians

Debt/Book Assets 10% 13% 16% 19% 12% 10% 13% 6% 14% 9% 12.2%
Debt/Mkt. Assets 9% 8% 16% 13% 7% 3% 4% 1% 7% 4% 7.2%
(Debt-Cash)/Book Assets -7% 2% -1% -9% -4% -8% -6% -21% -9% -23% -8.6%
(Debt-Cash)/Mkt Assets -4% -1% -3% -3% -2% -3% -5% -8% -5% -5% -3.9%
EBITDA Interest Coverage 6.03 4.06 9.00 4.38 5.58 3.59 7.06 13.00 4.20 -0.09 6
EBIT Interest Coverage 3.30 1.55 4.31 -0.05 0.37 1.84 5.04 8.52 -2.04 -2.91 2

Seagate Credit Rating: BBB

Seagate Buyout 8
 Prelude to the LBO
• May,1999: Seagate sells it’s Network and
Storage Management group to Veritas
Software
– Receives 155 million shares of Veritas stock
• 40% of Veritas outstanding shares
• Seagate becomes the largest Veritas stockholder

Seagate Buyout 9
 Prelude to the LBO
• November, 1999
– Veritas’ share price had risen by 200% since
Seagate had acquired its stake
– Seagate’s share price had increased by 25%
– Seagate’s market cap was below the market
value of the 128 million Veritas shares
Seagate still owned (see Exhibit 4)
• Implies negative value for Seagate’s operations
• Seagate by this time had sold some Veritas shares
in an attempt to realize some of the value of its
stake
Seagate Buyout 10
 Seagate’s Value
• Exhibit 4 shows that by November 12,
1999, Seagate’s market cap had fallen
below the pre-tax value of it’s stake in
Veritas
• Soon after that Seagate’s market cap
appears to track the after tax value of its
Veritas stake

Seagate Buyout 11
Market value of Seagate’s
Operations (3/10/00)
($million)
Seagate shares (million) (3/10/00) EX3 227.2
share price (3/10/00) EX3 $64.25
Seagate Market cap $mill 14598
Seagate Book Debt (3/10/00) EX3 $mill 704
Seagate's excess cash* $mill 858
Net debt $mill -154
Seagate's Asset Value $mill 14444

Seagate's Veritas Shares(million)

(3/10/00) EX6 128
Veritas share price (3/10/00) EX5 $168.69
Value of Seagate's Veritas shares $mill 21,592
Implied Value of Seagate's opers $mill** -7149

* 1999 cash = $1,623 million

Treat $765 million as WC cash
**If we assume Seagate’s Operations
have no value, $7,149 is the undervaluation
of Seagate’s shares
Seagate Buyout 12
Raising Seagate’s Market Value
Selling the Veritas Shares
• Seagate had tried selling some of its stake
in Veritas
– Sale of a large stake has a market impact
• Seagate’s ability to sell was, in fact, restricted by a
prior agreement with Veritas
– Proceeds of the sale create a corporate tax
liability:
• The 200% increase in the Veritas share price
implies that 67% of value raised by selling shares
is taxable at the 34% corporate rate
Seagate Buyout 13
 The Tax Liability
Created by Selling the Shares
• Selling Seagate’s Veritas shares creates a
tax liability
– Since the value of Seagate’s stake in Veritas
has appreciated by 200%, two-thirds of this
value is taxable
$million

Value of Seagate stake in Veritas (3/10/00) 21592

Capital gain 14467
Corporate tax liability @34% 4919
after tax value of share sale 16674

Seagate Buyout 14
 Does the Tax Liability Explain the
Undervaluation?

• Note that the tax liability of $4.9 billion

accounts for almost 70% of the
undervaluation of $7.1 billion, assuming
the value of Seagate’s operations is zero

Seagate Buyout 15
Raising Seagate’s Market Value
• One solution to Seagate’s undervalution is
to sell the Veritas Shares
– The drawback is the tax liability that creates
– Anothrer drawback is the market impact of
such a large sale
– Also such a sale is restricted by agreement
with Veritas

Seagate Buyout 16
Raising Seagate’s Market Value
• The buyout deal was proposed as an
alternative solution
– Structure of the deal is described below
• We’ll use the share sale as a benchmark
– We’ll compare how the Seagate shareholders
do with the buyout to how they would do if the
shares were simply sold and the taxes paid

Seagate Buyout 17
 Selling the Shares
• If Seagate’s Veritas shares were sold,
Seagate would receive $16.674 billion
after tax
– Ignores the market impact of the share sale
• Proceeds of the share sale and the excess
cash can be used to pay off Seagate’s
debt and pay a dividend of $16.674 + .858
- .704 billion = $16.828 billion
• Seagate’s market cap would then equal
the value of it’s operations
Seagate Buyout
 The Gain
• The gain from the sale of Veritas shares is
$16.828 billion less Seagate’s market
value of $14.598 billion
– So the gain is $ 2.230 billion
– Share price should then also equal the value
of Seagate’s operations

Seagate Buyout 19
 Solving Seagate’s Problem
• Alternative solution: two stage transaction
– First: Sale of Seagate operating assets plus
$765 million in cash to newly formed “Suez
Acquisition Company” controlled by Silver
Lake Partners
– Second: Merger of Seagate “shell” with
Veritas
• After first stage sale of Seagate operations
Seagate’s assets are its Veritas shares

Seagate Buyout 20
 Terms of the Merger
• Because it’s a stock swap and
reorganization, no tax liability is created
• Seagate shareholders receive 109 million
shares of Veritas plus cash for 128 million
Veritas shares
– Cash includes $858 million = ’99 cash less
$765 million
– Cash also includes proceeds from sale of
Seagate’s operating assets less existing debt
retired
Seagate Buyout 21
 Perspectives on the Deal
• Seagate Shareholders
– What do they gain from the deal?
– Is this better than selling the shares
• (Non-Seagate) Veritas Shareholders
– What do they gain?
• Silver Lake partners
– How much should they pay for Seagate’s
assets?
– How should they finance the buyout?
Seagate Buyout 22
 Valuing Seagate’s Assets
• What price should Suez pay for Seagate’s
operating assets?
– How do we value these assets
• How should the buyout be financed
– Is Seagate a good candidate for an LBO?
• How does the financing affect the value of
the operating assets?

Seagate Buyout 23
 Using APV
• Arriving at UFCF
– Use exhibit 8 projections
• What terminal value?
– Use perpetuity (or multiple?)
• Unlevered return?
• How much debt
– Use two different assumptions

Seagate Buyout 24
 Cash Flows
Exhibit 8
2000 2001 2002 2003 2004 2005 2006
Revenues 6619 7417 8564 9504 10416 11359 12350
EBITA 141 189 316 449 499 614 724
after tax oper profit (t=34%) 93 125 209 296 329 405 478
depreciation 625 626 642 666 708 726 729
Cap Ex 627 690 720 795 700 725 750
net working cap incr (22% of rev
inc) -40 176 252 207 201 207 218
UFCF 131 -115 -122 -39 137 199 239
TV (perp: ru = 10.53%, g = 3%) 3266
UFCF + TV 131 -115 -122 -39 137 199 3505

PV @ 10.53% 1,839
PV of tax shield = .34x500 170
operations value 2,009
debt 500
debt/value 0.25

Debt = $500 million indefinitely

Seagate Buyout 25
 Working capital
97 98 99 avg

revenues 8940 6819 6802

cash 1033 788 786
cash work cap % rev 12% 12% 12%
receivables 1041 799 872
% revenues 12% 12% 13%
inventories 808 508 451
% revenues 9% 7% 7%
current assets
% revenues 32% 31% 31%

accounts payable 863 577 714

% revenues 10% 8% 10%

net working capital 2019 1518 1395

% revenues 23% 22% 21% 22%

net working capital in Ex 3 2717 2241 1773

30.39% 32.86% 26.07%

Seagate Buyout 26
 Cash Working Capital
• It was assumed that the $765 million in
cash that Suez would receive was cash for
working capital
– This was 12% of the projected 2000
Revenues of $6.619 billion
– So we used 12% as the fraction of revenues
required for working capital cash
– If we assume WC cash is 12% of revenues,
and use Exhibit 3 to get other current assets
and liabilities, net WC is on average 22% of
revenues
Seagate Buyout 27
 The Unlevered Return
• We can’t use Seagate’s beta to obtain an
unlevered beta
– This is due to Seagate’s large stake in Veritas
• As noted, Seagate share price tracked that of
Veritas
– For the purpose of valuing Seagate’s
operations we use the beta’s of the
company’s that focus on producing disk drives
• Quantum, Western Digital and Maxtor

Seagate Buyout 28
Unlevering Quantum’s
Beta
Mar-00
EMRP 6%
30 yr Gov't 5.84%

Quantum
debt (book) 110
equity (book) 791
equity (mkt) 733
D/E (book) 0.14
D/V (book) 0.12
D/E (market) 0.15
D/V (market) 0.13
Debt return (BB rating) 9.18%
beta equity 0.8
beta debt 0.56
unlevered beta 0.78

Seagate Buyout 29
Unlevering Western Digital’s
Beta
Mar-00
EMRP 6%
30 yr Gov't 5.84%

Western Digital
debt (book) 236
equity (book) -154
equity (mkt) 670
D/E (book)
D/V (book)
D/E (market) 0.35
D/V (market) 0.26
Debt return (BB rating) 9.18%
beta equity 0.6
beta debt 0.56
unlevered beta 0.59

Seagate Buyout 30
Unlevering Maxtor’s
Beta
Mar-00
EMRP 6%
30 yr Gov't 5.84%

Maxtor
debt (book) 114
equity (book) 169
equity (mkt) 1316
D/E (book) 0.67
D/V (book) 0.40
D/E (market) 0.09
D/V (market) 0.08
Debt return (BB rating) 9.18%
beta equity 1
beta debt 0.56
unlevered beta 0.98

average unlevered beta 0.78

Avg of Maxtor and

Quantum 0.88

Seagate Buyout 31
 Unlevered Returns

EMRP 6%
30 yr Gov't 5.84%
unlevered beta 0.59 0.78 0.88 0.98
unlevered return 9.39% 10.53% 11.10% 11.70%

Seagate Buyout 32
 Alternative Assumptions
about Debt
• First, suppose that $500 million of the
acquisition is debt financed and that debt
is maintained at that level indefinitely
– Use perpetuity to calculate PV of tax shield
• Second, suppose that the initial debt is $1
billion and that debt is paid down when
cash flow is positive until debt reaches
$700 million. Then that level of debt is
maintained indefinitely

Seagate Buyout 33
 APV
$500 million Debt

PV @ 10.53% 1,839
PV of tax shield =
.34x500 170
operations value 2,009
debt 500
debt/value 0.25

Seagate Buyout 34
 Interest Coverage
$500 million Debt
assuming a BBB rating
Interest @ 7.72% 38.6
2000 EBITA/interest 3.65

2000 EBITA 141

1999 deprec 585
1999 deprec + amort 613
1999 amort = 2000 amort 28
2000 EBIT 113

Interest @ 7.72% 38.6

EBIT/interest 2.93

Seagate Buyout 35
 APV
$500 million Debt

rf = 5.84%
EMRP=6%
unlevered beta 0.59 0.78 0.98
unlevered return 9.39% 10.53% 11.70%
TV perp (g=3%) 3849 3266 2829
PV of TV 2053 1620 1304
PV of UFCF 234 219 204
PV of UFCF & TV 2288 1839 1508
% TV 90% 88% 86%
PV of tax shield = .34x500 170 170 170
APV = Suez Value 2458 2009 1678

D/V 0.20 0.25 0.30

Seagate Buyout 36
APV with EBITA multiple for TV
$500 million Debt
rf = 5.84
rm-rf =6%
unlevered beta 0.59 0.78 0.98
unlevered return 9.39% 10.53% 11.70%
TV 6x2006EBITA* 4344 4344 4344
PV of TV 2318 2155 2003
PV of UFCF 234 219 204
PV of UFCF & TV 2552 2374 2207
% TV 91% 91% 91%
PV of tax shield =
.34x500 170 170 170
APV = Suez value 2722 2544 2377

* Multiple from Exhibit 9

Seagate Buyout 37
 PV of Tax Shield
Debt of $1 billion
Year 2000 2001 2002 2003 2004 2005 2006
Debt 1000 951 951 951 951 836 700
interest @ 9.18% 92 87 87 87 87 77 64
after tax interest 61 58 58 58 58 51 42
UFCF 109 -83 -76 -2 173 237 278
debt reduction 49 0 0 0 116 136 0
interest tax shield 31 30 30 30 30 26 22
TV of tax shield 238
tax shield plus TV 31 30 30 30 30 26 260

PV of tax shield 272

Interest @ 9.18% 92
EBITA/interest 1.54
EBIT/interest 1.23

Seagate Buyout 38
 APV
Debt of $1 billion
$million

rf = 5.84
rm-rf =6%
unlevered beta 0.59 0.78 0.98
unlevered return 9.39% 10.53% 11.70%
TV perp (g=3%) 3849 3266 2829
PV of TV 2053 1620 1304
PV of UFCF 234 219 204
PV of UFCF & TV 2288 1839 1508
% TV 90% 88% 86%
PV of tax shield: init debt $1bill 271 271 271
APV =Suez Value 2558 2110 1779

Seagate Buyout 39
 Valuing Operations
multiple of EBITA
$million
1999
deprec 585
deprec + amort 613
amort 28
2000 EBIT 113
2000 EBITA 141
Value of operations @ 7xEBITA 987
Value of operations @ 9xEBITA 1269

Seagate Buyout 40
 Cash to Seagate Shareholders
• We now calculate the payments made to
Seagate Shareholders
– Assume that Suez pays a price that equals
one of the values calculated above
– Assume that Seagate shareholders pay back
$704 million in Debt

Seagate Buyout 41
Payment to Seagate Shareholders
$million

rf = 5.84%
EMRP=6%
unlevered beta 0.59 0.78 0.98
unlevered return 9.39% 10.53% 11.70%
TV perp (g=3%) 3849 3266 2829
PV of TV 2053 1620 1304
PV of UFCF 234 219 204
PV of UFCF & TV 2288 1839 1508
% TV 90% 88% 86%
PV of tax shield = .34x500 170 170 170
APV = Suez Value 2458 2009 1678

D/V 0.20 0.25 0.30

Debt retired 704 704 704
Suez value minus debt retired 1754 1305 974
Cash to Seagate shareholders 858 858 858
payment to Seagate
shareholders 2612 2163 1832

Seagate Buyout 42
 Payment to Seagate
Shareholders
• Seagate shareholders receive
– $2,009 million from Suez for Seagate’s
operations
– $858 million in cash
• Seagate shareholders pay
– $704 million = debt retired
• Net payment to Seagate Shareholders
– $2,867 million -$704 million = $2,163 million

Seagate Buyout 43
 What do Seagate shareholders
Gain from the Stock Swap?
• In addition to the net payment shown on
the previous slide Seagate shareholders
also gain from the stock swap
• The next few slides calculate the gain to
Seagate shareholders from the stock swap
ignoring the previous the cash payment
– We first ask how the stock swap should affect
the price of Veritas shares

Seagate Buyout 44
 Effect of the Swap
on the Veritas Share Price
Seagate shareholders
Veritas million shares (pre-buyout) 128
Veritas million shares (post buyout) 109
Reduction in Veritas shares (due to buyout) 19

Veritas Million Shares

Total pre-buyout (3/10/00) (exhibit 5) 393.6
Reduction in Total Veritas Shares 19
Total post swap shares (3/10/00) (exhibit 5) 374.6

Pre-buyout
Total Veritas million shares (3/10/00) 393.6
share price (3/10/00) $168.69
Veritas Market cap (3/10/00) ($million) 66396

Post buyout
Veritas Market cap ($million) 66396
Total Veritas million shares 374.6
implied Veritas share price $177.25

Seagate Buyout 45
 Gains to Seagate
Shareholders from Stock Swap
Seagate million shares (3/10/00) 227.2
share price (3/10/00) $64.25
Seagate Market cap ($million) 14598

• Before the buyout, the Market Cap of

Seagate was $14,598 million
• After the buyout, Seagate shareholders
hold 109 million Veritas shares which
should each be worth $177.25
Seagate shareholders
Veritas million shares (post buyout) 109
Veritas share price (post buyout) $177.25
Value of Veritas shares ($million) 19320

Gain to Seagate Shareholders

($milliion) 4722 =19320-14598
Seagate Buyout 46
 Total Gain to Seagate
Shareholders
• The gain from the stock swap is $4,722
million
• The net payment received in addition is
$2,163 million
• The total gain to Seagate Shareholders is
$4,722 million + $2,163 million =
$6,885million

Seagate Buyout 47
 A Good Deal for Seagate
Shareholders?
• By entering into this deal they would gain
$6.885 billion before banking fees
• This is almost equal to the $7.149 billion
by which Seagate is undervalued,
assuming it’s operations have zero value
• It clearly exceeds the $2.230 billion they
get from the alternative solution if the
operations have no value

Seagate Buyout 48
 A Good Deal?
• Suppose that the Veritas shares are sold,
the debt is paid off and the cash and sale
proceeds are used to pay the dividend
– If, after this, the market values Seagate’s
operations at $2.009 billion then the
alternative solution gives the Seagate
shareholders $4.239 billion which is still
$2.646 million less than the $6.885 billion they
realize from the buyout transaction

Seagate Buyout 49
Gains to Non-Seagate Veritas
Shareholders

pre-buyout Total Veritas million shares (3/10/00) 393.6

pre-buyout Veritas share price $168.69
pre-buyout Veritas Market cap ($million) 66396
pre-buyout Non-Seagate Veritas million shares 265.6
pre-buyout Value of Non-Seagate shares ($million) 44804
post buyout Vetitas million shares 374.6
post buyout Non-Seagate Veritas million shares 265.6
post buyout Veritas share price $177.25
post buyout value of Non-Seagate shares ($million) 47077
Gain to non-Seagate Veritas owners ($million) 2273

Seagate Buyout 50
 Gains to Non-Seagate Veritas
Shareholders
• Before the buyout 265.6 million Veritas
shares owned by non-Seagate
shareholders
– Because buyout reduced the total number of
Veritas shares by 19 million, the price of those
shares should have increased by $8.56 from
$168.69 to $177.25
– That would increase the value of the 265.6
million non-Veritas shares by $8.56x 265.6
million = $2,273 million
Seagate Buyout 51
 The Total Gain
• The $2,273 million of gains to the non-
Seagate Veritas Shareholders plus the
$6,885 million that the Seagate
Shareholders gain equals a total gain
$8,158 million = $7,149 million +
$2,009million

Seagate Buyout 52
 Source of the Gains
• Recall that
– $7,149 million is the undervaluation of the
Seagate’s shares assuming the operations
have no value
• So part of the gain comes from eliminating the
undervaluation of the Veritas shares held by
Seagate
– $2,009million is the price paid for the
operations
• The rest of the gain comes because this value is
obtained for Seagate’s operations
Seagate Buyout 53
 What Happened

$million
Actual outcome
Suez price 2,000.00
Cash to Seagate shareholders 858.00
debts paid by Seagate shareholders 1,200.00
gain to Seagate shareholders 1658
gain net of other costs 950.00
Stock swap gain to Seagate 4,722.11
total gain 5,672.11

Seagate Buyout 54
 Was the Actual Deal Good for
Seagate Shareholders?
• The actual deal gave them $5.672 billion
• Recall that Seagate could have achieved
some of this value by the selling the
Veritas shares
– Suppose that after the share sale and
dividend payment Seagate’s operations are
valued at $2 billion.
– Then the share sale and dividend would have
given them $4.230 billion. So they only gained
$1.442 billion more from the buyout
Seagate Buyout 55
 Why Seagate’s Shareholder’s
Gains were Reduced
• The gains to Silver Lake come at the
expense of Seagate’s Shareholders who
paid off almost $500 million in additional
debt (apparently accounts payable)
• Seagate’s shareholders also make less on
the deal because of the approximately
$700 million in other costs (fees) they
incur

Seagate Buyout 56
 The Division of the Gains

$million
Non-Seagate Veritas Gains 2,273
Seagate gains 1,442
Silver Lake gains 496=1,200-704
banker's fees 708=1,658-950
total gains = tax liability* 4,919

* See Slide 6

Seagate Buyout 57
 The Debt Structure of the Deal
• Silver Lake financed the deal with $1.3
billion in debt so the debt to value ratio
was initially about 65%
• $700 million of this debt was term loans
which matured in 5 and 6 years
• The senior debt which matured in 2007
was rated B1 by Moodys

Seagate Buyout 58