Summary
Eli Lilly & Company (LLY) filed an 8-K on September 8, 2005, detailing a significant financing transaction and providing an update on its Zyprexa® product liability litigation. The company's indirect wholly owned finance subsidiary, Eli Lilly Services, Inc., entered into a purchase agreement to issue $1.5 billion in Floating Rate Notes due 2008. Eli Lilly and Company will provide an unconditional guarantee for these notes, which are expected to be issued around September 14, 2005. The proceeds from this debt offering will be used to fund dividends ultimately paid to the company and for general corporate purposes, consistent with the American Jobs Creation Act of 2004. The Notes are being offered to qualified institutional buyers and persons outside the United States, exempt from registration under the Securities Act of 1933. Separately, the company disclosed an additional class-action lawsuit related to Zyprexa, filed on August 25, 2005, alleging inadequate testing and warnings, and improper promotion. This new suit does not impact the previously announced agreement in principle to settle most existing Zyprexa claims.
Key Highlights
- 1Eli Lilly is raising $1.5 billion through the issuance of Floating Rate Notes due 2008 by its finance subsidiary.
- 2Eli Lilly and Company is providing a full and unconditional guarantee for these notes.
- 3Proceeds will be used for general corporate purposes, including funding dividends, in accordance with the American Jobs Creation Act of 2004.
- 4The Notes are being offered to Qualified Institutional Buyers and non-U.S. persons under exemptions from Securities Act registration.
- 5An additional class-action lawsuit concerning Zyprexa has been filed, alleging inadequate testing, warnings, and promotion.
- 6This new Zyprexa lawsuit does not affect the existing agreement in principle to settle the majority of Zyprexa product liability claims.
- 7The Notes will bear interest at 3-Month LIBOR plus 5 basis points, resetting quarterly, with a maturity in September 2008.