Teva signs $5 billion term loan agreement, $4.5 billion revolver

By Wendy Van Sickle

Columbus, Ohio, Nov. 18 – Teva Pharmaceutical Industries Ltd. entered into a $5 billion term loan and a $4.5 billion revolving credit agreement on Monday, according to a 6-K filed with the Securities and Exchange Commission.

The term loan agreement provides for two $2.5 billion tranches, one maturing Nov. 16, 2018 and the other on Nov. 16, 2020. The tranche due 2018 will bear interest at Libor plus a margin of 100 basis points to 137.5 bps, and the other will bear interest at Libor plus 112.5 bps to 150 bps, both depending on Teva’s credit rating. Both tranches have a ratings-based commitment fee ranging from 15 bps to 20 bps.

Under the second tranche, principal installments of $250 million, $250 million, $500 million and $500 million will be due on the first, second, third and fourth anniversaries, respectively, with the balance due at maturity.

Proceeds will be used to partially fund the cash consideration of the company’s acquisition of the global generics business and some other assets of Allergan plc, and the term loan funding is conditioned upon the consummation of that transaction.

As a result of the new term loans, commitments under Teva’s existing $27 billion loan agreement dated Sept. 25 have been reduced to $22 billion from $27 billion.

Under the new revolver, loans and letters of credit will be available for about five years for Teva’s general corporate purposes, including permitted acquisitions, but borrowings will be capped at $3 billion until completion of the Allergan acquisition.

Borrowings will bear interest at Libor plus 100 bps to 137.5 bps, and the commitment fee ranges from 15 bps to 20 bps, both depending on ratings.

Teva’s existing $3 billion credit agreement will be terminated as a result of the new agreement.

Bank of America Merrill Lynch, Barclays Bank plc, BNP Paribas, Citibank, NA, London Branch, Credit Suisse Securities (USA) LLC, HSBC Bank plc, Mizuho Bank, Ltd., Morgan Stanley Senior Funding, Inc., RBC Capital Markets and Sumitomo Mitsui Banking Corporation acted as bookrunners and were joined as mandated lead arrangers by Banco Bilbao Vizcaya Argentaria, SA, New York Branch, Bank of China (Luxembourg) SA, Commerzbank AG, New York Branch, Intesa Sanpaolo, Lloyds Bank plc, PNC Bank, NA, the Toronto-Dominion Bank, The Bank of Tokyo-Mitsubishi UFJ, Ltd., the Bank of Nova Scotia and Scotiabank Europe plc.

Credit Industriel et Commercial, London Branch and Credit Industriel et Commercial, New York Branch acted as lead arrangers and Mizrahi Tefahot Bank Ltd. and DNB Capital LLC as arrangers.

Citibank, NA is the administrative agent.

Teva is a Petach Tikva, Israel-based pharmaceutical company. Allergan is an Irvine, Calif.-based multi-specialty health-care company.

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