Business Context and Reporting Period
Upjohn Inc., the predecessor entity to Viatris, filed this Form 8-K on June 26, 2020, reporting debt financings completed on June 22, 2020 and June 23, 2020. The financings supported the planned separation of Pfizer’s Upjohn Business and its combination with Mylan, a transaction that ultimately formed Viatris.
Key Financial Metrics and Financing
- Upjohn issued $7.45 billion of senior unsecured U.S. dollar notes across six maturities from 2022 through 2050, bearing fixed annual interest rates of 1.125% to 4.000%.
- Upjohn Finance B.V. issued €3.60 billion of senior unsecured euro notes across four maturities from 2022 through 2032, bearing fixed annual interest rates of 0.816% to 1.908%.
- Total stated principal issued was $7.45 billion plus €3.60 billion. The filing does not provide a consolidated dollar-equivalent amount, net proceeds, issuance costs, cash balance, revenue, profit, cash flow, margins, or liquidity ratios.
- Net proceeds, together with proceeds from other financing transactions, were intended to fund a $12.0 billion cash payment to Pfizer and related transaction fees and expenses. Any remaining proceeds were intended for general corporate purposes.
- The previously announced bridge loan commitments were fully terminated upon completion of the note offerings.
| Instrument | Principal | Coupon | Maturity |
|---|---|---|---|
| U.S. dollar notes | $1.00 billion | 1.125% | 2022 |
| U.S. dollar notes | $0.75 billion | 1.650% | 2025 |
| U.S. dollar notes | $0.75 billion | 2.300% | 2027 |
| U.S. dollar notes | $1.45 billion | 2.700% | 2030 |
| U.S. dollar notes | $1.50 billion | 3.850% | 2040 |
| U.S. dollar notes | $2.00 billion | 4.000% | 2050 |
| Euro notes | €0.75 billion | 0.816% | 2022 |
| Euro notes | €0.75 billion | 1.023% | 2024 |
| Euro notes | €0.85 billion | 1.362% | 2027 |
| Euro notes | €1.25 billion | 1.908% | 2032 |
Material Changes, Outlook, and Risks
- The primary material change was the creation of substantial new senior unsecured debt to finance the Pfizer-Mylan combination.
- The notes were privately placed under Rule 144A and Regulation S and were not initially registered under the Securities Act.
- Pfizer initially guaranteed the notes on a senior unsecured basis; those guarantees were automatically released upon completion of the Distribution. Following the Combination, specified Mylan entities were expected to become guarantors.
- If the Contribution, Distribution, and Combination were not completed by February 1, 2021, or if the transaction were otherwise abandoned before that date, the notes were subject to special mandatory redemption at 101% of principal, plus accrued interest.
- Specified change-of-control events generally required a repurchase offer at 101% of principal, plus accrued interest.
- The indentures include covenants relating to liens, sale-leaseback transactions, guarantees, mergers, asset sales, and certain subsidiary actions, together with customary events of default.
- Registration defaults under the U.S. dollar notes’ registration rights agreement could increase interest by 0.25% for the first 90-day period and an additional 0.25% for each subsequent period, subject to a maximum 0.50% increase.
- Key disclosed risks included failure to obtain regulatory or shareholder approvals, transaction delays or termination, COVID-19 impacts, integration and synergy risk, liquidity and financing risk, operational disruption, litigation, intellectual-property matters, manufacturing and supply-chain issues, competition, pricing and reimbursement uncertainty, and changes in economic or regulatory conditions.
Important Facts for Investors to Verify
- Verify completion and accounting treatment of the Pfizer separation, Distribution, and Mylan combination.
- Verify the final outstanding principal, currency exposure, interest expense, maturity schedule, refinancing requirements, and any subsequent redemptions or amendments.
- Review the complete U.S. dollar and euro indentures for covenant limitations, guarantee releases, change-of-control provisions, and events of default.
- Confirm whether the special mandatory redemption conditions were triggered or expired and whether the notes were subsequently exchanged or registered.
- Assess post-combination leverage, liquidity, cash flow coverage, and compliance with debt covenants; these measures are not provided in this filing.