Item 1.01
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Entry Into a Material Definitive Agreement.
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Credit Agreement
On December 23, 2020 (the “Effective Date”), Walgreens Boots Alliance, Inc. (the “Company”) entered into a revolving credit agreement (the “Credit Agreement”) with the designated borrowers from time to time party thereto (each, a “Designated Borrower”), the lenders from time to time party thereto and Wells Fargo Bank, National Association (“Wells Fargo”), as administrative agent and swing line lender.
The Credit Agreement includes (i) a $1.25 billion senior unsecured 364-day revolving credit facility (the “364-Day Facility”) and (ii) a $2.25 billion senior unsecured 18-month revolving credit facility, with a swing line subfacility commitment amount of $350 million (the “18-Month Facility” and together with the 364-Day Facility, the “Facility”). The 364-Day Facility’s termination date is the earlier of (i) 364 days from the Effective Date (subject to the extension thereof pursuant to the Credit Agreement) and (ii) the date of termination in whole of the aggregate amount of the revolving commitments under the 364-Day Facility pursuant to the Credit Agreement. The 18-Month Facility’s termination date is the earlier of (i) 18 months from the Effective Date (subject to the extension thereof pursuant to the Credit Agreement) and (ii) the date of termination in whole of the aggregate amount of the revolving commitments under the 18-Month Facility pursuant to the Credit Agreement.
The Company will be a borrower under the Credit Agreement. Subject to the terms of the Credit Agreement, the Company and any Designated Borrowers (the “Borrowers”) may borrow, repay and reborrow amounts borrowed under the Facility while the commitments thereunder are in effect. The ability of the Borrowers to request each loan under the Facility from time to time after the Effective Date is subject to the satisfaction (or waiver) of certain customary conditions set forth therein. Loans under the Credit Agreement will be available in U.S. dollars, British Pound Sterling and Euro. Pursuant to the terms of the Credit Agreement, the Company will provide a guarantee (the “Parent Guarantee”) of any obligations of any Designated Borrower under the Credit Agreement.
Borrowings under the Credit Agreement will bear interest at a fluctuating rate per annum equal to, at the applicable Borrower’s option, the Eurocurrency Rate or the Alternate Base Rate (each as defined in the Credit Agreement), in each case, plus an applicable margin (i) in the case of the 364-Day Facility, of 0.95% in the case of Eurocurrency Rate loans and 0.00% in the case of Alternate Base Rate loans and (ii) in the case of the 18-Month Facility, based on the Company’s credit ratings. In addition, the Company has agreed to pay to the lenders under the Credit Agreement certain customary fees, including an upfront fee and an unused commitment fee.
Voluntary prepayments of the loans and voluntary reductions of the unutilized portion of the commitments under the Credit Agreement are permissible, in each case, without penalty, subject to certain conditions pertaining to minimum notice and minimum reduction amounts as described in the Credit Agreement.
The Credit Agreement contains representations and warranties and affirmative and negative covenants customary for unsecured financings of this type and substantially consistent with those of the Company’s existing revolving credit agreement, dated as of January 18, 2019 (as amended, restated, supplemented or otherwise modified from time to time, the “Mizuho Credit Agreement”), among the Company, the lenders from time to time party thereto and Mizuho Bank, Ltd., as administrative agent. The Credit Agreement includes a financial covenant requiring that, as of the last day of each fiscal quarter, commencing with the first full quarter ending after the Effective Date, the ratio of Consolidated Debt to Total Capitalization (as those terms are defined in the Credit Agreement) shall not be greater than 0.60:1.00; provided that such ratio is subject to increase in certain circumstances set forth in the Credit Agreement.
The Credit Agreement also contains various events of default (subject to certain grace periods, to the extent applicable), including, events of default for the nonpayment of principal, interest or fees, breach of covenants; payment defaults on, or acceleration under, certain other material indebtedness; inaccuracy of the representations or warranties in any material respect; bankruptcy or insolvency; certain unfunded liabilities under employee benefit plans; certain unsatisfied judgments; certain ERISA violations; the invalidity or unenforceability of the Credit Agreement or any note issued in accordance therewith; and invalidity of the Parent Guarantee.