Dell Inc. (DELL) plans to free up about $7.4 billion of its
subsidiaries' cash--much of it held overseas--as part of a deal to
take the company private, according to a regulatory filing.
The Round Rock, Texas, company on Tuesday said it accepted an
offer from its management team and Silver Lake Partners, a private
equity firm, to go private in a $24.4 billion deal.
As part of the deal, Dell's subsidiaries will transfer part of
their holdings in cash to the company, according to a merger
agreement filed with the Securities and Exchange Commission late
Wednesday. The "target amount" of the transfers is $7.4 billion,
the document states, with a potential limit of $8.1 billion.
Dell had $11.3 billion in cash and short-investments as of Nov.
2, 2012, but has said that most of that is overseas. Repatriating
that money would mean paying U.S. corporate taxes on it, so Dell
has kept it in foreign subsidiaries.
The practice is common at many big U.S. firms and is a
particularly hot-button issue in the technology industry, where
companies such as Microsoft Corp. and Cisco Systems Inc. keep tens
of billions of dollars offshore. John Chambers, Cisco System Inc.'s
(CSCO) chief executive, and other industry leaders have long
lobbied for a tax holiday that would allow them to bring these
funds back to the U.S. with a minimal tax hit.
The buyout group plans to raise $13.5 billion by selling bonds
and will borrow an additional $2 billion from Microsoft Corp.
(MSFT). Michael Dell, the computer maker's founder and CEO, will
contribute his 14% stake and about $750 million and Silver Lake
will throw in $1.4 billion. That leaves about $3 billion to be
funded with Dell's cash.
A Dell spokesman didn't immediately respond to a request for
comment.
The filing's mention of overseas cash was earlier reported by
the Financial Times.
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