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Walgreens targets IG credit ratings, may up leverage for acquisitions
By Devika Patel
Knoxville, Tenn., Oct. 15 – Walgreens Boots Alliance, Inc. continues to target investment-grade credit ratings, but may take its leverage higher if the right acquisition presents.
“Nothing new on our leverage goals, we will continue to target solid investment grades,” executive vice president and global chief financial officer James Kehoe said on the company’s fourth quarter and year ended Aug. 31 earnings conference call on Thursday.
“However, we may temporarily flex upwards for the right strategic acquisition,” he said.
Cash and cash equivalents were $1,193,000,000 as of Aug. 31, 2021, compared to $469 million as of Aug. 31, 2020.
Long-term debt was $7,675,000,000 as of Aug. 31, 2021, compared to $12,203,000,000 as of Aug. 31, 2020.
On Aug. 17, Walgreens reported that it intended to exercise the call option on its $1.25 billion of 3.3% notes due 2021 on Sept. 18.
The notes were redeemed in full at par plus accrued interest.
On Thursday, the company entered into a commitment letter with Bank of America, NA that provides for up to $5 billion of term loan commitments in three tranches.
Specifically, BofA has committed to provide a senior unsecured multi-tranche delayed draw term loan credit facility, consisting of a 364-day $2 billion term loan; a $2 billion two-year term loan; and a $1 billion three-year term loan.
A total of at least $3 billion can be used by Walgreens to increase its existing stake in VillageMD by acquiring class D preferred units of VillageMD. The remainder may be used for general corporate purposes.
Walgreens is a Deerfield, Ill.-based drugstore chain.
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