Business Context and Reporting Period
Company: Bristol-Myers Squibb Company
Filing Type: Form 8-K (Current Report)
Date of Report: May 16, 2019
Primary Event: Completion of a $19 billion senior unsecured notes offering to fund the cash portion of the proposed acquisition of Celgene Corporation.
Key Financial Metrics and Capital Structure
Debt Issuance: The Company issued senior unsecured notes with a combined aggregate principal amount of $19 billion. The issuance consists of nine distinct tranches:
- 2020 Floating Rate Notes: $750 million (LIBOR + 0.200%)
- 2022 Floating Rate Notes: $500 million (LIBOR + 0.380%)
- 2021 Notes: $1.0 billion (2.550% fixed)
- 2022 Notes: $1.5 billion (2.600% fixed)
- 2024 Notes: $3.25 billion (2.900% fixed)
- 2026 Notes: $2.25 billion (3.200% fixed)
- 2029 Notes: $4.0 billion (3.400% fixed)
- 2039 Notes: $2.0 billion (4.125% fixed)
- 2049 Notes: $3.75 billion (4.250% fixed)
Use of Proceeds: Net proceeds are intended to fund the aggregate cash portion of the merger consideration for Celgene, pay related fees and expenses, and cover general corporate purposes.
Bridge Loan Termination: The Company terminated a $33.5 billion bridge loan commitment (previously reduced to $25.5 billion) in its entirety. All accrued fees were paid, and the commitment was reduced to $0.
Revenue, Profit, and Cash Flow: The filing text does not provide specific values for revenue, profit, operating cash flow, or margins.
Material Changes and Agreements
Entry into Material Definitive Agreement: The Company entered into a Purchase Agreement and a Tenth Supplemental Indenture to govern the new Notes. A Registration Rights Agreement was also executed with initial purchasers (Morgan Stanley, Barclays, Credit Suisse, and Wells Fargo).
Termination of Material Definitive Agreement: The Bridge Loan Commitment Letter with Morgan Stanley Senior Funding, Inc. and MUFG Bank, Ltd. was terminated on May 16, 2019, following the successful note issuance.
Outlook, Risks, and Contingencies
Merger Contingency: The offering is not conditioned on the consummation of the Celgene Merger. However, a special mandatory redemption clause applies if the Merger is not consummated by July 30, 2020, or if the Company notifies the trustee it will not pursue the Merger prior to that date. In such an event, the Company must redeem all Notes at 101% of the aggregate principal amount plus accrued interest.
Registration Rights Obligation: The Company must file a registration statement to exchange the Notes for new notes. Failure to complete the exchange offer by the 365th day after the Merger (or fail to declare a shelf registration effective within specified timelines) will trigger an obligation to pay additional interest.
Redemption Terms:
- 2020 and 2022 Floating Rate Notes are not redeemable prior to maturity.
- Other tranches may be redeemed prior to maturity at a "make-whole" price (greater of 100% principal or present value of remaining payments plus premium).
- After the applicable Par Call Date, longer-dated notes may be redeemed at 100% of principal.
Investor Verification Checklist
- Verify the final closing date and status of the Celgene Corporation acquisition.
- Confirm the specific interest rates for the floating rate notes based on the quarterly LIBOR resets.
- Review the Tenth Supplemental Indenture (Exhibit 4.1) for detailed covenants regarding liens, sale/leaseback transactions, and mergers.
- Monitor the timeline for the Registration Rights Agreement to ensure the exchange offer or shelf registration is filed to avoid additional interest penalties.
- Assess the Company's liquidity position post-issuance to ensure it can meet the mandatory redemption requirement (101% principal) if the Celgene Merger fails by July 30, 2020.