Item 1.01Entry Into a Material Definitive Agreement.
Revolving Credit Agreement
On August 29, 2018, Walgreens Boots Alliance, Inc. (the “Company”) entered into a revolving credit agreement (the “Revolving Credit Agreement”) with the lenders and letter of credit issuers from time to time party thereto, Wells Fargo Bank, National Association, as administrative agent, and the joint lead arrangers, joint bookrunners andco-syndication agents named therein.
The Revolving Credit Agreement is an unsecured revolving credit facility with an aggregate commitment in the amount of $3.5 billion, with a letter of credit subfacility commitment amount of $500 million. The facility termination date is the earlier of (a) August 29, 2023, subject to the extension thereof pursuant to the Revolving Credit Agreement and (b) the date of termination in whole of the aggregate amount of the revolving commitments pursuant to the Revolving Credit Agreement.
The Company will be a borrower under the Revolving Credit Agreement. The ability of the Company to request each loan or letter of credit under the Revolving Credit Agreement is subject to the satisfaction (or waiver) of certain customary conditions set forth therein. Revolving loans and letters of credit will be available under the Revolving Credit Agreement in U.S. dollars, Sterling, Yen, Swiss Francs or such other currencies as the administrative agent, the lenders and letter of credit issuers may approve.
Borrowings under the Revolving Credit Agreement will bear interest at a fluctuating rate per annum equal to, at the Company’s option, the Alternate Base Rate or the Eurocurrency Rate (each as defined in the Revolving Credit Agreement), in each case, plus an applicable margin calculated based on the Company’s credit ratings. In addition, the Company has agreed to pay to the lenders under the Revolving Credit Agreement certain customary fees, including (i) an upfront fee to each lender in an aggregate amount equal to 0.080% of each such lender’s revolving commitment for the portion of the revolving commitment up to and equal to such lender’s commitment under the revolving credit agreement dated as of November 10, 2014, among Walgreen Co., the Company, the lenders and letter of credit issuers from time to time party thereto, Bank of America, N.A., as administrative agent, and the joint lead arrangers, joint book managers andco-syndication agents named therein (the “2014 Revolving Credit Agreement”), as applicable,plus 0.10% of such lender’s commitment for the portion of the commitment that exceeds such lender’s commitment under the 2014 Revolving Credit Agreement, and (ii) a commitment fee in an amount equal to a percentage per annum, calculated based on the Company’s credit ratings, on the daily actual unused amount of each such lender’s commitment, which commitment fee is earned and payable quarterly.
Voluntary prepayments of the loans and voluntary reductions of the unutilized portion of the commitments under the Revolving Credit Agreement are permissible, in each case, without penalty, subject to certain conditions pertaining to minimum notice and minimum reduction amounts as described in the Revolving Credit Agreement. Subject to the terms of the Revolving Credit Agreement, borrowers may borrow, repay and reborrow amounts borrowed under the Revolving Credit Agreement while the commitments thereunder are in effect.
The Revolving Credit Agreement contains representations and warranties and affirmative and negative covenants customary for unsecured financings of this type and substantially consistent with those of the Company’s existing revolving credit agreement, dated as of August 24, 2017, among the Company, the lenders from time to time party thereto and Bank of America, N.A., as administrative agent, including a financial covenant requiring that, as of the last day of each fiscal quarter, commencing with the first full quarter ending after the effective date of the Revolving Credit Agreement, the ratio of Consolidated Debt to Total Capitalization (as those terms are defined in the Revolving Credit Agreement) shall not be greater than 0.60:1.00.
The Revolving Credit Agreement also contains various events of default (subject to certain grace periods, to the extent applicable), including, events of default for the nonpayment of principal, interest or fees, breach of covenants; payment defaults on, or acceleration under, certain other material indebtedness; inaccuracy of the representations or warranties in any material respect; bankruptcy or insolvency; certain unfunded liabilities under employee benefit plans; certain unsatisfied judgments; certain ERISA violations; and the invalidity or unenforceability of the Revolving Credit Agreement or any note issued in accordance therewith.
