Upjohn gets revolver, term loan as Mylan combination moves forward

By Rebecca Melvin

New York, June 17 – Upjohn Inc. entered into a revolving credit agreement and term loan credit agreement with Bank of America NA as administrative agent on Tuesday, according to an 8-K filing with the Securities and Exchange Commission.

The credit agreement is in line with a previously announced combination of Pfizer Inc.’s off-patent drug business, or Upjohn business, and Mylan NV.

Under the new revolver, Upjohn, which will be renamed Viatris, may obtain extensions of credit of up to $4 billion in U.S. dollars or alternative currencies including euro, sterling or yen. The facility matures in three years.

The facility is unsecured, and will initially bear interest at Libor plus 170 basis points. It has a facility fee, which currently accrues at 30 bps on the daily amount of the revolving commitments.

The total commitments under the senior unsecured 364-day bridge loan facility in line with the commitment letter among Upjohn, Goldman Sachs Bank USA, Goldman Sachs Lending Partners LLC and the other parties, were reduced by $1.5 billion concurrently with the revolver becoming effective.

Up to $1.5 billion under the revolver will be available to Upjohn in a single draw on the closing date for the purpose of funding a portion of the cash payment of $12 billion by Upjohn to Pfizer as partial consideration for Pfizer’s contribution of the Upjohn business to Upjohn. Other extensions of credit are available from and after the consummation of the combination, subject to the satisfaction of customary conditions.

The revolver includes a $300 million sub-facility for the issuance of letters of credit and a $175 million sublimit for swingline borrowings. The swingline borrowings will be made available in U.S. dollars only.

Upjohn may seek additional commitments under the revolver from lenders or other financial institutions if Upjohn would be in compliance with the financial covenant.

In addition to funding a portion of the cash payment, proceeds from the revolver will be used for general corporate purposes including repayment of outstanding obligations under Mylan’s existing $2 billion revolver dated July 27, 2018.

Within one business day after consummation of the combination, the revolving credit facility will be guaranteed by each affiliate or subsidiary of Upjohn, including Mylan Inc.

The facility contains customary covenants including the requirement that a leverage ratio of no greater than 4.25 to 1.00 as of the last day of each of the first four full fiscal quarters ending after the closing date is maintained, and 3.75 to 1.00 as of the last day of any fiscal quarter onwards. Affirmative and negative covenants in the revolver are applicable only from and after the consummation of the combination.

There are default provisions customary for facilities of this type. If an event of default occurs, the lenders may, among other things, terminate their commitments and declare all borrowings immediately payable.

Term loan credit agreement

The term loan credit agreement that Upjohn entered into on Tuesday has a delayed-draw term loan credit agreement by and among Upjohn, Mizuho Bank, Ltd. and MUFG Bank, Ltd., as administrative agent.

The agreement provides for an 18-month $600 million principal amount delayed-draw senior unsecured term loan facility. The total commitments under the bridge commitment letter were reduced concurrently with the effectiveness of the term loan credit agreement by an amount equal to $600 million.

Borrowings will initially bear interest at Libor plus 162.5 bps per year.

Upjohn intends to borrow the full $600 million principal amount available to fund a portion of the cash payment to Pfizer and related transaction fees and expenses.

The facility will be guaranteed by each affiliate or subsidiary of Upjohn, including Mylan Inc.

The term loan credit facility is unsecured and contains customary covenants.

The Upjohn-Mylan combination is the result of a spinoff of Upjohn from Pfizer with generic drug company Mylan in an all-share deal that raises $12 billion of debt.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.