Fairchild Semi Calls in Senior Subordinate Notes

January 13, 2005 by Jeff Shepard

Fairchild Semiconductor International Inc. (South Portland, ME) announced that it has given notice to call all of the company's $350 million in 10½% senior subordinated notes due in 2009 using approximately $213.9 million in cash plus approximately $154.5 million in proceeds from its newly amended senior credit facility. Fairchild expects the refinancing to reduce the company's annual interest expense by approximately $33 million and cut the company's debt by approximately $200 million.

The call premium for the 10½% notes is 5.25% over par. Fairchild will incur cash expense of approximately $19.4 million in the first quarter of 2005 for the call premium plus refinancing fees, and will record a non-cash charge of approximately $5.6 million for the write-off of deferred financing fees associated with the redeemed notes. The amended $630 million senior credit facility includes a new six-year term B-3 loan of $450 million, replacing the previous $300 million term B-2 loan, and retains a $180 million revolving line of credit, which remains undrawn.

The company expects the call of the senior subordinated notes to close in February and expects to see the favorable impact of lower interest expense in the second quarter of 2005.