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AbbVie gets $38 billion bridge loan to acquire Allergan, repay debt
By Angela McDaniels
Tacoma, Wash., June 25 – AbbVie Inc. entered into a credit agreement on Tuesday that provides for a $38 billion bridge credit facility, according to an 8-K filing with the Securities and Exchange Commission.
The proceeds of the bridge loan may be used to finance the cash portion of the acquisition of Allergan plc and to repay certain existing debt of Allergan.
Advances under the bridge loan will be available once certain conditions are met and mature on the date that is 364 days later.
The interest rate will be Libor plus a margin that ranges from 75 basis points to 225 bps depending on AbbVie’s debt rating.
Morgan Stanley Senior Funding, Inc. and MUFG Bank Ltd. are the lead arrangers and bookrunners. The former is the administrative agent, and the latter is the syndication agent.
The bridge loan is guaranteed by some AbbVie subsidiaries.
AbbVie will acquire Allergan in a cash-and-stock transaction for a transaction equity value of about $63 billion. Allergan shareholders will receive 0.866 of an AbbVie share and $120.30 in cash for each Allergan share.
According to an investor presentation, AbbVie aims to maintain credit ratings of Baa2/BBB or better and targets a net debt-to-EBITDA ratio of 3 times in the near term.
AbbVie plans to reduce debt by $15 billion to $18 billion by 2021 with further deleveraging through 2023. It plans use cash flows from its Humira arthritis drug – which currently represents 60% of total company sales – to pay down incremental debt.
AbbVie is a biopharmaceutical company based in North Chicago, Ill. Allergan is a pharmaceutical company based Dublin.
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