8-KMaterial AgreementsFinancial EventsExhibits & Filings

AMGEN INC 8-K Report, Material Agreement (Sep 20, 2013)

Filed September 20, 2013For Securities:AMGN

Summary

Amgen Inc. (AMGN) filed an 8-K on September 20, 2013, to report the entry into a significant material definitive agreement. Specifically, the company entered into a 5-year term loan facility credit agreement for $5.0 billion in senior unsecured term loans. This financing is primarily intended to fund the acquisition of Onyx Pharmaceuticals, Inc. and associated fees and expenses. This substantial debt financing underscores Amgen's commitment to its strategic acquisition of Onyx Pharmaceuticals. Investors should note the terms of the loan, including its maturity, amortization schedule, and interest rate structure, which is tied to the company's debt ratings. The covenants within the agreement, such as limitations on debt and asset sales, will also shape Amgen's financial flexibility moving forward.

Key Highlights

  • 1Amgen entered into a $5.0 billion senior unsecured term loan facility credit agreement.
  • 2The loan has a 5-year term.
  • 3The primary purpose of the loan is to finance the acquisition of Onyx Pharmaceuticals, Inc.
  • 4The loan includes quarterly amortization of 2.5% of the principal amount.
  • 5Interest rates are variable, based on either the LIBOR rate or a base rate, plus a margin dependent on Amgen's credit rating.
  • 6The credit agreement contains customary covenants, including limitations on debt, liens, and affiliate transactions.
  • 7Amgen has the right to repay the loans early without penalty.

Frequently Asked Questions

The primary purpose of the $5.0 billion senior unsecured term loan facility is to finance Amgen's acquisition of Onyx Pharmaceuticals, Inc., along with any related fees and expenses.

The loan has a 5-year term. The remaining principal balance will mature and be payable in full on the fifth anniversary of the Closing Date (the date the Onyx acquisition is consummated).

Amgen has the option to pay interest based on either the applicable LIBOR rate plus a margin (0.750% to 1.625%) or a base rate plus a smaller margin (0.000% to 0.625%). The specific margin applied depends on Amgen's senior long-term unsecured debt rating. Based on its ratings at the time, the margin was 1.00% for LIBOR or 0.000% for the base rate.

Yes, the credit agreement includes customary covenants that place limitations on Amgen's activities. These restrictions include limitations on mergers, asset sales, liens, sale-leasebacks, affiliate transactions, and subsidiary indebtedness. There is also a maximum ratio of total debt to the sum of net worth and total debt.