Teva Pharmaceutical Industries Ltd. announced amendments to its USD and JPY term loan and revolving credit facilities, providing the company greater flexibility in its financial leverage ratio covenants. The amended leverage ratio covenants in the credit agreements permit a gradual increase in the leverage ratio from 5.0 times currently to 5.9 times at Q3 and Q4 2018, gradually declining to 3.5 times by December 31, 2021.
Michael McClellan, EVP and Chief Financial Officer of Teva, stated: “We are pleased to have the continued support of our lenders and appreciate their confidence in Teva and specifically in our robust restructuring plan.” Mr. McClellan continued: “This amendment is an important part of our plan to obtain additional flexibility with our credit facilities and manage our capital structure.”
As of January 31, 2018, the aggregate principal amount collectively outstanding under the USD term loan facility was $1.6 billion, the aggregate principal amount outstanding under the JPY term loan facilities was $1.4 billion and the aggregate committed principal amount (as of January 31, 2018this facility remained fully undrawn) under the USD revolving credit facility will be reduced from $4.5 billion to $3.0 billion. The amendments received the support of lenders holding approximately 94% of the aggregate loans and undrawn commitments across the five credit facilities.
The amendments include certain terms and conditions including Teva’s commitment not to distribute common share dividends while its net debt to EBITDA is above 4.75 times. Additionally, although no prepayment is required, if Teva decides to make a prepayment using proceeds from divested assets and/or future indebtedness, then this payment must be applied on a pro-rata basis between all USD and JPY term loans.