Walgreens details $12.8 billion bridge facility for Rite Aid merger

By Marisa Wong

Morgantown, W.Va., Oct. 29 – Walgreens Boots Alliance, Inc. entered into a bridge facility commitment letter on Oct. 27 with UBS Securities LLC and UBS AG, Stamford Branch for a $12.8 billion senior unsecured bridge facility, according to an 8-K filing with the Securities and Exchange Commission.

The company entered into the commitment letter upon signing its merger agreement with Rite Aid Corp. As previously announced, Walgreens intends to finance the merger, valued at $17.2 billion, through a combination of cash on hand and debt financing.

The commitment letter will terminate one year from the date of the merger agreement, subject to an automatic three-month extension if the merger agreement is also extended.

Borrowings under the facility will bear interest at Libor plus a margin based on ratings. The margin ranges from 75 basis points to 137.5 bps.

The facility, if funded, will mature 364 days after the initial borrowings; provided that the company can extend up to $3 billion of the facility for an additional 90 days.

The company expects to obtain permanent financing for the transaction prior to the closing date of the merger, which would replace the facility.

Walgreens is a Deerfield, Ill.-based drugstore chain. Rite Aid is a Camp Hill, Pa.-based drugstore chain.

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