CVS Health enters $5 billion 364-day term loan agreement

By William Gullotti

Buffalo, N.Y., May 2 – CVS Health Corp. entered into a $5 billion 364-day term loan agreement on Monday in connection with its acquisition of Oak Street Health, Inc., according to an 8-K filing with the Securities and Exchange Commission.

The facility, which matures and becomes payable April 30, 2024, will be unsecured and will not amortize.

The term loan will carry interest at SOFR plus a margin, ranging from 100 basis points to 125 bps, as determined by the company’s debt ratings.

In addition to customary terms and covenants, the new agreement limits CVS’s total capitalization ratio to a maximum of 0.65 to 1.00. If CVS Health does not elect a “material acquisition” step-up in any of its existing revolving credit facilities, the maximum ratio will be automatically lowered to 0.60 to 1.00.

The commitments were advanced in full on Tuesday, partially funding the acquisition and merger agreement.

Barclays Bank plc is the administrative agent, also acting as a joint lead arranger and joint bookrunner with BofA Securities, Inc., Goldman Sachs Bank USA, JPMorgan Chase Bank, NA and Wells Fargo Securities, LLC.

CVS is a Woonsocket, R.I., operator of retail pharmacies and a pharmacy benefits manager.

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