Summary
Biogen Inc. (BIIB) announced on September 1, 2023, its entry into a new $1.5 billion unsecured credit facility with JPMorgan Chase Bank, N.A., effective August 28, 2023. This facility is designed to fund a significant portion of the consideration for Biogen's previously announced acquisition of Reata Pharmaceuticals, Inc., as well as repay certain Reata indebtedness and related expenses. The credit facility is comprised of two tranches: a $750 million 364-day tranche (Tranche A) and a $750 million three-year tranche (Tranche B). The new credit facility replaces a previously announced bridge loan facility. The interest rates on borrowings will be tied to either Term SOFR or a Base Rate, plus an applicable margin based on Biogen's debt ratings. The agreement includes customary covenants and events of default, as well as a financial covenant requiring Biogen to maintain a maximum consolidated leverage ratio of 3.5 to 1.0, which can temporarily increase to 4.0 to 1.0 under specific circumstances related to the Reata acquisition and other material acquisitions.
Key Highlights
- 1Biogen secured a new $1.5 billion unsecured credit facility to support the Reata Pharmaceuticals acquisition.
- 2The facility is split into a $750 million 364-day term loan (Tranche A) and a $750 million three-year term loan (Tranche B).
- 3Funding from the new credit facility will be used for Reata acquisition costs, Reata debt repayment, and transaction expenses.
- 4The new credit facility replaces Biogen's previously announced $1.5 billion bridge loan facility.
- 5Interest rates will be variable, based on Term SOFR or a Base Rate, plus a margin tied to Biogen's debt ratings.
- 6A key financial covenant requires Biogen to maintain a consolidated leverage ratio of no more than 3.5x, with a potential temporary increase to 4.0x.
- 7The funding of the credit facility is contingent upon the consummation of the Reata merger.