CVS Health enters $4 billion 364-day bridge term loan agreement

By Wendy Van Sickle

Columbus, Ohio, Oct. 26 – CVS Health Corp. entered into a $4 billion 364-day bridge term loan agreement on Friday in connection with its proposed merger with Aetna Inc., according to an 8-K filing with the Securities and Exchange Commission.

The bridge facility will be unsecured and will not amortize.

The lenders will be obligated to make loans under the agreement upon written request of CVS following the satisfaction or waiver of some conditions, including consummation of the merger.

Barclays Bank plc, Goldman Sachs Bank USA and Bank of America Merrill Lynch are the joint bookrunners and lead arrangers. Barclays is the administrative agent, and Goldman Sachs and Bank of America, NA are the co-syndication agents.

Borrowings will bear interest at Libor plus a ratings-based margin ranging from 87.5 basis points to 175 bps for the first 89 days after the closing date of the merger. The margin steps up to a range from 112.5 bps to 200 bps for days 90 through 179; from 137.5 bps to 225 bps for days 180 through 269; and from 162.5 bps to 250 bps for days 270 and thereafter.

There is a ratings-based commitment fee ranging from 7 bps to 25 bps.

The bridge loan agreement contains some covenants including a maximum ratio of consolidated debt to total capitalization debt of 0.65 times.

As reported in December 2017, CVS Health said it will use $45 billion of new debt in order to acquire all the outstanding shares of Aetna for a combination of cash and stock, which will be financed through a combination of existing cash on hand and debt.

The transaction values Aetna at approximately $207 per share or $77 billion, including the assumption of Aetna’s debt.

Under the terms of the merger, Aetna shareholders will receive $145.00 per share in cash and 0.8378 of a CVS share for each Aetna share.

CVS is a Woonsocket, R.I., operator of retail pharmacies and a pharmacy benefits manager. Aetna is a health care benefits company based in Hartford, Conn.

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