Item 1.01Entry Into Material Definitive Agreements.
Revolving Credit Agreement with HSBC Bank USA, N.A.
On August 30, 2019 (the “Effective Date”), Walgreens Boots Alliance, Inc. (the “Company”) entered into a revolving credit agreement (the “HSBC Credit Agreement”) with the lenders from time to time party thereto and HSBC Bank USA, N.A. (“HSBC”), as administrative agent.
The HSBC Credit Agreement includes a $500 million senior unsecured revolving credit facility (the “HSBC Facility”). The HSBC Facility’s termination date is the earlier of (a) 18 months following the Effective Date, subject to extension thereof pursuant to the HSBC Credit Agreement and (b) the date of termination in whole of the aggregate amount of the commitments pursuant to the HSBC Credit Agreement.
The Company will be the borrower under the HSBC Credit Agreement. Subject to the terms of the HSBC Credit Agreement, the Company may borrow, repay and reborrow amounts borrowed under the HSBC Facility while the commitments thereunder are in effect. The ability of the Company to request each loan under the HSBC Facility from time to time after the Effective Date is subject to the satisfaction (or waiver) of certain customary conditions set forth therein. Loans under the HSBC Credit Agreement will be available in U.S. dollars, British Pound Sterling and Euro.
Borrowings under the HSBC Credit Agreement will bear interest at a fluctuating rate per annum equal to, at the Company’s option, the Eurocurrency Rate or the Alternate Base Rate (each as defined in the HSBC Credit Agreement), in each case, plus an applicable margin of 0.95% in the case of Eurocurrency Rate loans and 0.00% in the case of Alternate Base Rate loans. In addition, the Company has agreed to pay to the lenders under the HSBC Credit Agreement certain customary fees, including an upfront fee and an unused commitment fee.
Voluntary prepayments of the loans and voluntary reductions of the unutilized portion of the commitments under the HSBC 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 HSBC Credit Agreement.
The HSBC 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 January 18, 2019, among the Company, the lenders from time to time party thereto and Mizuho Bank, Ltd., as administrative agent. The HSBC Credit Agreement includes 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, the ratio of Consolidated Debt to Total Capitalization (as those terms are defined in the HSBC Credit Agreement) shall not be greater than 0.60:1.00;provided that such ratio is subject to increase in certain circumstances set forth in the HSBC Credit Agreement.
The HSBC 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 HSBC Credit Agreement or any note issued in accordance therewith.
The foregoing description of the HSBC Credit Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the HSBC Credit Agreement, which is attached hereto as Exhibit 10.1 and is incorporated herein by reference.
The lenders under the HSBC Credit Agreement and/or their affiliates have in the past performed, and may in the future from time to time perform, investment banking, financial advisory, lending and/or commercial banking services, or other services for the Company and its subsidiaries, for which they have received, and may in the future receive, customary compensation and expense reimbursement.
Revolving Credit Agreement with Citibank, N.A.
On August 30, 2019, the Company entered into a revolving credit agreement (the “Citi Credit Agreement”) with the lenders from time to time party thereto and Citibank, N.A. (“Citi”), as administrative agent.
The Citi Credit Agreement includes a $500 million senior unsecured revolving credit facility. Other than as described herein, the terms and conditions of the Citi Credit Agreement, including the applicable margin and maturity date, are substantially similar to the HSBC Credit Agreement.
