Micro Focus launches $5.5bn loan to complete HPE software merger

Software firm Micro Focus International has launched a $5.5bn leveraged loan in relation to its proposed acquisition of Hewlett Packard Enterprise’s software business.

Last September Micro Focus agreed an $8.8bn merger with HPE's software business, which is expected to close in the third quarter of 2017.

The FTSE 100 company on Thursday launched of the syndication process for new credit facilities on behalf of MA Finance Co, and Seattle SpinCo to complete the deal.

It comprises of a $500m revolving credit facility and $5bn of term loans with syndication expected to be completed in three week’s time.

The loan will be used to fund a cash payment to HP of $2.5m, subject to adjustments, refinancing Micro Focus' existing $1.5m facilities, fund the return on value to Micro Focus shareholders of between $400m and $500m and pay transaction costs.

On 9 March, the European Union gave its clearance to the deal, following an earlier green light in the US, which means the deal is now subject to conditions including approval from Micro Focus's shareholders and certain regulatory approvals which remain outstanding.

Upon completion of the merger, Micro Focus plans to move its year end to 31 October, in order to align financial year ends between the two companies.