Pace Secures $450 Million For 2Wire Deal

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Set-top manufacturer Pace has obtained a total of $450 million in financing to fund its proposed acquisition of 2Wire, a key supplier of home gateways to AT&T and other telcos.

U.K.-based Pace in July announced plans to acquire 2Wire for $475 million in cash (inclusive of 2Wire's cash on hand, expected to be approximately $55 million at closing). The transaction is expected to close in the fourth quarter pending shareholder and regulatory approvals.

Pace's funding for the deal comprises a $300 million term loan and a $150 million revolving credit facility, underwritten by HSBC Bank plc and The Royal Bank of Scotland. Pace said it also has cancelled a £35 million revolving facility with The Royal Bank of Scotland.

San Jose, Calif.-based 2Wire is currently owned by a consortium that includes Alcatel-Lucent, AT&T, Telmex, Oak Investment Partners, Meritech Capital Partners and Technology Crossover Ventures. Customers include AT&T -- which uses the vendor's equipment in its U-verse network -- as well as Telmex, BT, CenturyLink, Bell Canada and Blockbuster.

Pace, based in Saltaire, West Yorkshire, counts more than 100 customers worldwide; in the U.S., these include Comcast, Time Warner Cable, Bright House Networks and Bresnan Communications. The company is the world's large set-top supplier and following the 2Wire acquisition also would become the No. 1 provider of telco residential gateway devices in the U.S. and the third biggest globally.

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