8-KMaterial AgreementsFinancial EventsExhibits & Filings

AbbVie Inc. 8-K Report, Material Agreement (Jul 16, 2019)

Filed July 16, 2019For Securities:ABBV

Summary

AbbVie Inc. announced on July 11, 2019, the entry into a significant Term Loan Credit Facility totaling $6.0 billion, comprised of three tranches with maturities of 364 days, 3 years, and 5 years. This financing is specifically earmarked to partially fund the cash component of AbbVie's pending acquisition of Allergan plc, along with associated fees, expenses, and the repayment of Allergan's existing revolving credit facility. The company also amended its existing Revolving Credit Agreement to accommodate temporary increases in financial covenant levels post-Allergan acquisition, indicating proactive financial management for the integration. The establishment of this substantial credit facility underscores AbbVie's commitment to completing the Allergan acquisition and demonstrates its ability to secure significant funding for the transaction. Investors should note that the success of this financing is closely tied to the closing of the Allergan deal. The terms of the credit facility, including interest rate options and covenants, are standard for this type of unsecured financing, with margins dependent on AbbVie's public debt rating.

Key Highlights

  • 1AbbVie entered into a $6.0 billion Term Loan Credit Facility on July 12, 2019.
  • 2The facility consists of three tranches: $1.5 billion (364-day), $2.5 billion (3-year), and $2.0 billion (5-year).
  • 3Proceeds are intended to partially finance the cash component of the Allergan plc acquisition, related expenses, and repayment of Allergan's revolving credit facility.
  • 4AbbVie amended its existing Revolving Credit Agreement to modify financial covenants, allowing for temporary increases post-Allergan acquisition.
  • 5Borrowings under the Term Loan Facility can bear interest at either a Base Rate or Eurocurrency Rate, with margins tied to AbbVie's public debt rating.
  • 6The Term Loan Credit Agreement includes standard affirmative, negative, and financial covenants for unsecured financings.

Frequently Asked Questions

The primary purpose of the $6.0 billion Term Loan Credit Facility is to provide partial funding for AbbVie's acquisition of Allergan plc. The funds will be used to cover the cash portion of the consideration, associated fees and expenses, and to repay Allergan's existing revolving credit facility.

The amendment to the Revolving Credit Agreement modifies financial covenants to permit temporary increases in leverage levels after the completion of the Allergan acquisition. This proactive adjustment is intended to facilitate the integration of Allergan and ensure compliance with debt covenants during the post-acquisition period.

AbbVie has the option to borrow under the Term Loan Facility at either a Base Rate plus an applicable margin or a Eurocurrency Rate plus an applicable margin. The specific margin applied will depend on AbbVie's then-current public debt rating.

Yes, advances under the Term Loan Facility are subject to the satisfaction of certain conditions set forth in the credit agreement, and AbbVie intends to draw upon the commitments upon the consummation of the Allergan Acquisition.