Cigna enters up to $3.25 billion revolver, $3 billion term loan

By Marisa Wong

Morgantown, W.Va., April 12 – Cigna Corp. entered into a revolving credit and letter-of-credit agreement and a term loan credit agreement on April 6 in connection with its planned acquisition of Express Scripts Holding Co., according to an 8-K filing with the Securities and Exchange Commission.

The revolving credit agreement replaces Cigna’s fifth amended and restated revolving credit and letter-of-credit agreement dated Dec. 22.

JPMorgan Chase Bank, NA, Citigroup Global Markets Inc., Merrill Lynch, Pierce, Fenner & Smith Inc., Morgan Stanley Senior Funding, Inc., MUFG Bank, Ltd. and Wells Fargo Securities, LLC are joint lead arrangers and joint book managers with JPMorgan Chase Bank, NA as administrative agent, Citibank, NA as syndication agent and Bank of America, NA, Morgan Stanley Senior Funding, Inc., MUFG Bank, Ltd. and Wells Fargo Bank, NA as documentation agents.

Prior to the merger, Cigna will be the borrower under the revolver. On and after the merger, subsidiary Halfmoon Parent, Inc. will be the borrower.

Before the merger, Cigna can borrow up to a total principal amount of $1.5 billion for general corporate purposes, of which up to $500 million is available for the issuance of standby letters of credit.

On and after the merger, Halfmoon can borrow up to a total principal amount of $3.25 billion for general corporate purposes, of which up to $500 million is available for the issuance of standby letters of credit.

The credit agreement also includes an option to increase the facility amount by up to $500 million and an option to extend the termination date of April 5, 2023 for additional one-year periods.

Borrowings will bear interest at Libor plus an applicable margin based on Cigna’s or, after the merger, Halfmoon’s public debt ratings. The applicable margin ranges from 75 basis points to 125 bps.

The commitment fee ranges from 5 bps to 15 bps, also based on ratings.

The revolving credit agreement contains a financial covenant that the borrower may not permit its leverage ratio to be greater than 0.50 to 1.00 prior to the merger and 0.60 to 1.00 on or after the merger.

Term loan

The term loan credit agreement provides for a three-year unsecured term loan totaling $3 billion.

Morgan Stanley Senior Funding, MUFG Bank, Citigroup Global Markets, JPMorgan Chase Bank, Merrill Lynch, Pierce, Fenner & Smith and Wells Fargo Securities are joint lead arrangers and joint book managers with Morgan Stanley Senior Funding as administrative agent and MUFG Bank, Citibank, JPMorgan Chase Bank, Merrill Lynch, Pierce, Fenner & Smith and Wells Fargo Securities as syndication agents.

The term loan will be available on the effective date to finance the merger, repay some existing debt of Express Scripts and pay fees and expenses in connection with the merger.

Concurrently with entry into the term loan, the commitments under Cigna’s bridge facility were reduced to $23.7 billion. Cigna had entered into a commitment letter on March 8 with Morgan Stanley Senior Funding and MUFG for a $26.7 billion 364-day senior unsecured bridge term loan.

The term loan may be prepaid, and its commitments may be reduced, at any time in whole or in part without premium or penalty. The credit agreement does not include mandatory prepayment provisions.

Commitments will terminate on the earliest of 11:59 p.m. on the date that is five business days after Dec. 8, 2018, which can be extended to the date that is five business days after June 8, 2019 in some cases; completion of the merger without any use of the term loans; and the date an announcement is made about the termination of the merger.

Borrowings will bear interest at Libor plus an applicable margin based on Cigna’s or, after the merger, Halfmoon’s public debt ratings. The applicable margin ranges from 75 bps to 125 bps.

The term loan also requires the borrower to maintain a maximum leverage ratio of 0.60 to 1.00.

Cigna is a Bloomfield, Conn.-based health service company. Express Scripts Holdings is a pharmacy benefit management company based in St. Louis.

© 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.