Published on 5/26/2016 in the Prospect News Investment Grade Daily.
New Issue: Walgreens prices $6 billion of notes in five tranches
By Cristal Cody
Eureka Springs, Ark., May 26 – Walgreens Boots Alliance Inc. priced $6 billion of notes in five tranches on Thursday, according to a FWP filing with the Securities and Exchange Commission.
The company sold $1.25 billion of 1.75% two-year notes at 99.963 to yield 1.769%, a spread of 90 basis points over Treasuries.
The $1.5 billion tranche of 2.6% five-year notes priced at 99.944 to yield 2.612%, or Treasuries plus 125 bps.
Walgreens sold $750 million of 3.1% seven-year notes with a spread of 150 bps over Treasuries. The notes priced at 99.725 to yield 3.144%.
The company brought $1.9 billion of 3.45% 10-year notes at 99.748 to yield 3.48%, a spread of 165 bps plus Treasuries.
In the long bond tranche, Walgreens sold $600 million of 4.65% 30-year notes at 99.216 to yield 4.699%, or Treasuries plus 205 bps.
BofA Merrill Lynch, HSBC Securities (USA) Inc., UBS Securities LLC, J.P. Morgan Securities LLC, Lloyds Securities Inc., MUFG, Mizuho Securities USA Inc., UniCredit Capital Markets LLC and Wells Fargo Securities, LLC were the bookrunners.
Proceeds will be used to help fund the cash portion for the company’s acquisition of Rite Aid Corp., to retire a portion of Rite Aid’s existing debt and for general corporate purposes.
If the merger is not completed on or before the occurrence of a special mandatory redemption trigger, set for one year after the note sale closes, Walgreens will be required to redeem the notes due in 2018, 2021 and 2023 at a price equal to 101% of the principal of the notes to be redeemed, plus accrued and unpaid interest.
Proceeds from the sale of the 2026 and 2046 notes then would be used for general corporate purposes.
Walgreens is a Deerfield, Ill.-based drugstore chain.
| Issuer: | Walgreens Boots Alliance Inc.
|
| Amount: | $6 billion
|
| Securities: | Notes
|
| Bookrunners: | BofA Merrill Lynch, HSBC Securities (USA) Inc., UBS Securities LLC, J.P. Morgan Securities LLC, Lloyds Securities Inc., MUFG, Mizuho Securities USA Inc., UniCredit Capital Markets LLC and Wells Fargo Securities, LLC
|
| Senior co-managers: | Deutsche Bank Securities Inc., Santander Investment Securities Inc., Societe Generale, U.S. Bancorp Investments, Inc. and SMBC Nikko Securities America, Inc.
|
| Co-managers: | Loop Capital Markets LLC, Williams Capital Group, LP, BB&T Capital Markets, Mischler Financial Group, Inc. and RBS Securities Inc.
|
| Pricing date: | May 26
|
| Settlement date: | June 1
|
| Ratings: | Moody’s: Baa2
|
| S&P: BBB
|
| Fitch: BBB
|
| Distribution: | SEC registered
|
|
|
| Two-year notes
|
| Amount: | $1.25 billion
|
| Maturity: | May 30, 2018
|
| Coupon: | 1.75%
|
| Price: | 99.963
|
| Yield: | 1.769%
|
| Spread: | Treasuries plus 90 bps
|
| Call feature: | Make-whole call at Treasuries plus 15 bps; if merger does not close before special mandatory redemption trigger, notes redeemed at 101
|
|
|
| Five-year notes
|
| Amount: | $1.5 billion
|
| Maturity: | June 1, 2021
|
| Coupon: | 2.6%
|
| Price: | 99.944
|
| Yield: | 2.612%
|
| Spread: | Treasuries plus 125 bps
|
| Call feature: | Make-whole call before May 1, 2021 at Treasuries plus 20 bps; on or after May 1, 2021 at par; if merger does not close before special mandatory redemption trigger, notes redeemed at 101
|
|
|
| Seven-year notes
|
| Amount: | $750 million
|
| Maturity: | June 1, 2023
|
| Coupon: | 3.1%
|
| Price: | 99.725
|
| Yield: | 3.144%
|
| Spread: | Treasuries plus 150 bps
|
| Call feature: | Make-whole call before April 1, 2023 at Treasuries plus 25 bps; on or after April 1, 2023 at par; if merger does not close before special mandatory redemption trigger, notes redeemed at 101
|
|
|
| Ten-year notes
|
| Amount: | $1.9 billion
|
| Maturity: | June 1, 2026
|
| Coupon: | 3.45%
|
| Price: | 99.748
|
| Yield: | 3.48%
|
| Spread: | Treasuries plus 165 bps
|
| Call feature: | Make-whole call before March 1, 2026 at Treasuries plus 25 bps; on or after March 1, 2026 at par
|
|
|
| Thirty-year notes
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| Amount: | $600 million
|
| Maturity: | June 1, 2046
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| Coupon: | 4.65%
|
| Price: | 99.216
|
| Yield: | 4.699%
|
| Spread: | Treasuries plus 205 bps
|
| Call feature: | Make-whole call before Dec. 1, 2045 at Treasuries plus 35 bps; on or after Dec. 1, 2045 at par
|
|
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