Brocade Communications Systems on Tuesday secured a $1.1 billion loan to fund its acquisition of Foundry Networks despite a tightening of credit markets amid the Wall Street meltdown.

View a slide show of 2008's hottest tech M&A deals.

The loan came through even as the Dow Jones Industrial Average fell more than 500 points (5.11%), and many technology stocks dropped even more steeply. Among those hardest hit were Sun, Nortel, Amazon.com and Qwest Communications International, all down more than 10%. Apple shares went down 9.25% while Google suffered less damage, falling 6.79%. As they did in the bloodbath last Monday, most major tech stocks, including Microsoft and Cisco, outpaced the Dow in their journey down on Tuesday.

Brocade's planned acquisition of Foundry, announced in July, will expand the storage-area-networking pioneer into the Ethernet LAN business for an end-to-end set of offerings. Brocade said in July it would exchange a combination of stock and cash for each Foundry share, partially funding the deal with about $1.5 billion of debt financing from Bank of America and Morgan Stanley.

Such arrangements are common, but by the time Brocade held an analyst meeting in mid-September to lay out its plans for Foundry, Wall Street investment banks were already teetering and stocks were on their way down. Financial analysts at the event repeatedly asked Brocade CEO Michael Klayko about the financing of the deal, and he said each time that he was confident it would come through.

Brocade said Tuesday it got a $1.1 billion term loan facility and a $125 million revolving credit facility. Bank of America N.A. led the funding, joined by Banc of America Securities, Morgan Stanley Senior Funding and other institutions. Brocade also said it expects to raise as much as $400 million in additional financing. Brocade stuck by its forecast that the acquisition would be completed by year's end.

News of the loan, released after the U.S. trading day, perked up both companies' shares. After falling $0.39 to $4.43 at the closing bell, Brocade shares (Nasdaq: BRCD) were up $0.36 in after-hours trading late Tuesday. Foundry (Nasdaq: FDRY), which dropped $0.91 to $16.26 during the day, was up $1.28 after hours.

Also on Tuesday, VoIP service provider Vonage Holdings announced new terms for its proposed debt financing with Silver Point Finance. It announced $215 million in private debt financing with Silver Point in July, but has restructured that financing, which now totals $220.3 million. The company expects that deal to close next month. Its stock (VG, on the New York Stock Exchange) had fallen $0.10 to $0.85 in the day's trading but was up almost $0.03 after hours. Vonage has settled a series of patent lawsuits but is still struggling as bigger players, such as cable operators, offer competing VoIP plans packaged with other services.

The IDG News Service is a Network World affiliate.