Mead Johnson enters into $1 billion one-year term loan agreement

By Marisa Wong

Morgantown, W.Va., Oct. 22 – Mead Johnson Nutrition Co. entered into a $1 billion short-term loan agreement on Wednesday with Citibank, NA as syndication agent and JPMorgan Chase Bank, NA as administrative agent, according to an 8-K filing with the Securities and Exchange Commission.

The loan agreement matures in April 2016.

Borrowings will bear interest at Libor plus a margin based on the company’s issuer credit rating. Exact pricing was not disclosed in the 8-K.

Under the loan agreement, if at any time the company does not have a corporate credit rating of either BBB- or higher by Standard & Poor’s or Baa3 or higher by Moody’s Investors Service, wholly owned subsidiary Mead Johnson & Co. LLC will automatically guarantee the loan obligations.

In addition, the agreement contains some financial covenants. The company is required to maintain a ratio of consolidated total debt to consolidated EBITDA of not greater than 3.5 times and a ratio of consolidated EBITDA to consolidated interest expense of at least 3 times.

Based in Glenview, Ill., Mead Johnson makes pediatric nutrition products.

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