What is the primary reason for this bridge loan?

The primary reason for the $9.1 billion bridge loan is to ensure BDX has funding available to complete the acquisition of CareFusion Corporation, specifically to cover a portion of the cash consideration and associated transaction costs. It acts as a backup if BDX cannot secure permanent financing in time.

When does BDX expect to use this bridge loan?

BDX stated that it only intends to borrow under the bridge loan agreement to the extent it is unable to obtain the contemplated permanent financing for the CareFusion acquisition. This means it's a backstop facility and not necessarily a planned source of funds.

What are the key financial covenants associated with this loan?

The bridge loan agreement includes financial covenants requiring BDX to maintain a ratio of consolidated EBITDA to interest expense of not less than 5.00:1.00 and a ratio of Debt to EBITDA of no more than 4.75:1.00, as of the last day of each fiscal quarter following the closing of the bridge loan.

What is the maturity date of this bridge loan?

The bridge loan has a term of 364 days, meaning it is due and payable within one year of borrowing.

BDX 8-K: Material Agreements & Financial Events

Summary

Becton Dickinson and Company (BDX) has filed an 8-K report detailing the entry into a $9.1 billion 364-day bridge term loan agreement. This facility is specifically intended to fund a portion of the cash consideration and related transaction costs for the previously announced acquisition of CareFusion Corporation. While BDX intends to use its cash on hand and permanent financing for the acquisition, this bridge loan provides a crucial backstop to ensure funding availability should permanent financing not be secured in time. The loan is unsecured and its terms, including interest rates and covenants, are largely consistent with BDX's existing credit agreement, with financial covenants focusing on EBITDA to interest expense and Debt to EBITDA ratios.

Key Highlights

1BDX entered into a $9.1 billion, 364-day bridge term loan agreement.
2The purpose of the loan is to finance a portion of the cash consideration and transaction costs for the acquisition of CareFusion Corporation.
3The bridge loan serves as a contingency, intended to be used only if permanent financing for the CareFusion acquisition is not secured.
4The bridge loan is unsecured, with interest rates tied to Eurodollar or base rates plus a margin based on BDX's credit ratings and loan tenor.
5Financial covenants within the agreement mirror existing credit agreements, requiring specific ratios for consolidated EBITDA to interest expense and Debt to EBITDA.
6The loan includes standard covenants restricting mergers, asset sales, liens, and affiliate transactions.
7Borrowing under the agreement is subject to several conditions, including the consummation of the CareFusion merger and the absence of material adverse effects.

BECTON DICKINSON & CO 8-K Report, Material Agreement (Nov 14, 2014)

Summary

Key Highlights

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