Business Context and Reporting Period
Upjohn Inc., the predecessor entity associated with the planned Viatris combination, filed this Form 8-K on June 16, 2020. The filing reports financing arrangements entered into in connection with the proposed combination of Pfizer’s global established-medicines business with Mylan N.V. in a Reverse Morris Trust transaction. The filing does not provide operating results for a reporting period.
Key Financial and Liquidity Metrics
- Revolving facility: $4.0 billion senior unsecured revolving credit facility, including a $300 million letter-of-credit subfacility and a $175 million swingline sublimit.
- Intended initial revolver draw: Up to $1.5 billion in a single draw to fund part of Upjohn’s $12.0 billion cash payment to Pfizer for the contributed business.
- Term loan: $600 million, 18-month delayed-draw senior unsecured term loan facility, which Upjohn intends to draw in full to fund part of the cash payment and transaction fees and expenses.
- Potential refinancing use: Revolver proceeds may also be used to repay obligations under Mylan Inc.’s existing $2.0 billion revolving credit facility.
- Interest rates: The revolver initially bears LIBO plus 1.70% or base rate plus 0.70%, with a 0.30% facility fee. The term loan bears LIBO plus 1.625% or base rate plus 0.625%; each spread increases by 0.25 percentage points beginning nine months after the term closing date.
- Leverage covenant: Consolidated leverage may not exceed 4.25 to 1.00 during the first four full fiscal quarters after closing and 3.75 to 1.00 thereafter.
- Maturity: Revolver borrowings mature three years after the revolver closing date; term loan borrowings mature 18 months after the term closing date.
- The filing provides no revenue, profit, cash flow, margin, balance-sheet debt, or liquidity metrics for Upjohn or the combined company.
Material Changes Versus the Prior Comparable Period
No comparable-period financial information is presented. The material change disclosed is the creation of new committed financing and the concurrent reduction of commitments under the existing senior unsecured 364-day bridge facility by $1.5 billion for the revolver and $600 million for the term loan.
Guidance, Outlook, Risks, and Unusual Items
- Availability of the facilities is conditioned on customary closing requirements and delivery of certificates regarding satisfaction or expected satisfaction of conditions to the Distribution, Contribution, and proposed combination.
- The facilities are intended primarily to fund the $12.0 billion cash payment to Pfizer, transaction expenses, and selected refinancing needs.
- Guarantees by qualifying subsidiaries, including Mylan Inc., are expected to become effective after consummation of the combination and upon specified conditions; no subsidiary was required to guarantee the facilities as of June 16, 2020.
- Affirmative and negative covenants, customary events of default, and restrictions on indebtedness, liens, investments, acquisitions, dividends, and fundamental changes apply after the relevant closing dates.
- Management’s forward-looking statements concern financing, timing and completion of the combination, anticipated synergies, future operations, and capital allocation. The filing identifies risks including failure to obtain approvals, failure to complete the transaction, COVID-19 effects, integration difficulties, liquidity and financing constraints, regulatory and legal matters, manufacturing and supply-chain issues, competition, pricing and reimbursement uncertainty, and inability to realize expected synergies.
- The filing does not confirm that either facility had been drawn or that the combination had closed as of June 16, 2020.
Most Important Facts for Investors to Verify
- Whether the Form 10 became effective and all required shareholder, regulatory, and transaction conditions were satisfied.
- The actual revolver and term-loan closing dates and amounts ultimately drawn.
- The combined company’s opening debt, leverage ratio, liquidity, and refinancing of Mylan’s existing revolving facility.
- Whether the $12.0 billion cash payment to Pfizer and related transaction expenses were funded as planned.
- The final guarantees, covenant compliance, interest costs, and maturity or refinancing plans for the facilities.
- Subsequent filings for the completed combination, operating results, integration costs, synergies, and changes to the financing arrangements.