The terms of Microsoft's $2 billion loan into the war chest of Denali Holdings, the Dell private buyout entity led by Michael Dell and Silver Lake Partners, are now public record. Microsoft's money was key in raising the $24.4 billion required to finalize the offer for Dell, but it's possible Dell will benefit even beyond the loan; the loan documents make clear that after the acquisition is complete, Dell will re-negotiate its payment terms for Microsoft software licenses.
"From and after the date hereof," the securities purchase agreement between Microsoft and Denali states, "each of the parties hereto agree to negotiate in good faith and enter into… one or more agreements between the parties and/or their Subsidiaries, in order to modify, alter or amend, effective as of the Closing, the standard terms for payment under the existing commercial agreements between (Microsoft) and/or its Subsidiaries, on the one hand, and Dell and/or its Subsidiaries, on the other hand, including the master OEM relationship agreements."
The OEM relationship agreement specifies the terms by which Dell pays for Windows operating system licenses for the computers it distributes. Just who those terms would be altered to favor isn't clear, but the terms and the loan itself may be part of a move by Microsoft to keep Dell from abandoning the sale of desktop PCs by giving Dell a break on Windows licensing fees. That could create trouble with other PC manufacturers looking to improve margins in the headwinds of declining PC sales.
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