Item 1.01 Entry Into a Material Definitive Agreement.
Delayed Draw Term Loan Credit Agreement
On April 9, 2021 (the “Effective Date”), Walgreens Boots Alliance, Inc. (the “Company”) entered into a delayed draw term loan credit agreement (the “Credit Agreement”) with the lenders from time to time party thereto and Wells Fargo Bank, National Association (“Wells Fargo”), as administrative agent.
The Credit Agreement includes a $2,750,000,000 senior unsecured delayed draw term loan facility (the “Facility”). The Facility’s termination date is the earliest of (x) the Maturity Date (as defined below), (y) the date of acceleration of all term loans and termination of all commitments pursuant to the Credit Agreement and (z) the date of prepayment of all loans and the termination of all commitments pursuant to the Credit Agreement. “Maturity Date” shall mean October 9, 2021 (the “Initial Maturity Date”); provided that if the Closing Date (as defined in the Share Purchase Agreement (as defined below)) shall not have occurred on or prior to the Initial Maturity Date, the Maturity Date shall be automatically extended to April 8, 2022.
The Company will be the borrower under the Credit Agreement. Subject to the terms of the Credit Agreement, the Company may borrow under the Facility during the period commencing on the Effective Date and ending on the earlier of (i) the date 45 days thereafter and (ii) the date of acceleration of all the loans and the termination in whole of the commitments under the Facility (such period, the “Availability Period”). The ability of the Company to request each loan under the Facility during the Availability Period is subject to the satisfaction (or waiver) of certain customary conditions set forth therein. Loans under the Credit Agreement shall be denominated in U.S. dollars.
Borrowings under the 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 Credit Agreement), plus an applicable margin of (i) on and prior to the Initial Maturity Date, 0.70% in the case of Eurocurrency Rate loans and 0.00% in the case of Alternate Base Rate loans and (ii) after the Initial Maturity Date, 0.75% in the case of Eurocurrency Rate loans and 0.00% in the case of Alternate Base Rate loans.
Voluntary prepayments of the loans and, during the Availability Period, voluntary reductions of the unutilized portion of the commitments under the 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 Credit Agreement. Outstanding loans under the Facility will be prepaid by the net cash proceeds received by the Company from the sale of its Alliance Healthcare business pursuant to that certain Share Purchase Agreement (“Share Purchase Agreement”), dated as of January 6, 2021, by and between the Company and AmerisourceBergen Corporation. Amounts borrowed under the Facility and repaid or prepaid may not be reborrowed.
The 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 December 23, 2020, among the Company, the lenders from time to time party thereto and Wells Fargo, as administrative agent. The Credit Agreement includes a financial covenant requiring that, as of the last day of each fiscal quarter, commencing with the first quarter ending after the Effective Date, the ratio of Consolidated Debt to Total Capitalization (as those terms are defined in the 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 Credit Agreement.
The 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 Credit Agreement or any note issued in accordance therewith.
