Teva Completes Amendment to Credit Facilities
Teva Pharmaceutical Industries Ltd., (NYSE and TASE: TEVA) today 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, 2018 this 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.
Teva Pharmaceutical Industries Ltd. (NYSE and TASE: TEVA) is a leading global pharmaceutical company that delivers high-quality, patient-centric healthcare solutions used by approximately 200 million patients in over 60 markets every day. Headquartered in Israel, Teva is the world’s largest generic medicines producer, leveraging its portfolio of more than 1,800 molecules to produce a wide range of generic products in nearly every therapeutic area. In specialty medicines, Teva has the world-leading innovative treatment for multiple sclerosis as well as late-stage development programs for other disorders of the central nervous system, including movement disorders, migraine, pain and neurodegenerative conditions, as well as a broad portfolio of respiratory products. Teva is leveraging its generics and specialty capabilities in order to seek new ways of addressing unmet patient needs by combining drug development with devices, services and technologies. Teva's net revenues in 2016 were $21.9 billion. For more information, visit www.tevapharm.com.
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 regarding amendments to our USD and JPY term loan and revolving credit facilities, which are based on management’s current beliefs and expectations and are subject to substantial risks and uncertainties, both known and unknown, that could cause our future results, performance or achievements to differ significantly from that expressed or implied by such forward-looking statements. Important factors that could cause or contribute to such differences include risks relating to:
- our substantially increased indebtedness and significantly decreased cash on hand, which may limit our ability to incur additional indebtedness, engage in additional transactions or make new investments, and may result in a further downgrade of our credit ratings; and our inability to raise debt or borrow funds in amounts or on terms that are favorable to us;
- our generics medicines business, including: that we are substantially more dependent on this business, with its significant attendant risks, following our acquisition of Allergan plc’s worldwide generic pharmaceuticals business (“Actavis Generics”); our ability to realize the anticipated benefits of the acquisition (and any delay in realizing those benefits) or difficulties in integrating Actavis Generics; the increase in the number of competitors targeting generic opportunities and seeking U.S. market exclusivity for generic versions of significant products; price erosion relating to our generic products, both from competing products and as a result of increased governmental pricing pressures; and our ability to take advantage of high-value biosimilar opportunities;
- our specialty medicines business, including: competition for our specialty products, especially Copaxone®, our leading medicine, which faces competition from existing and potential additional generic versions and orally-administered alternatives; our ability to achieve expected results from investments in our product pipeline; competition from companies with greater resources and capabilities; and the effectiveness of our patents and other measures to protect our intellectual property rights;
- our business and operations in general, including: failure to effectively execute the recently announced restructuring plan; uncertainties relating to the potential benefits and success of our new organizational structure and recent senior management changes; our ability to develop and commercialize additional pharmaceutical products; manufacturing or quality control problems, which may damage our reputation for quality production and require costly remediation; interruptions in our supply chain; disruptions of our or third party information technology systems or breaches of our data security; the impact of continuing consolidation of our distributors and customers; and variations in patent laws that may adversely affect our ability to manufacture our products;
- our ability to consummate dispositions on terms acceptable to us; adverse effects of political or economic instability, major hostilities or terrorism on our significant worldwide operations; and our ability to successfully bid for suitable acquisition targets or licensing opportunities, or to consummate and integrate acquisitions;
- compliance, regulatory and litigation matters, including: costs and delays resulting from the extensive governmental regulation to which we are subject; the effects of reforms in healthcare regulation and reductions in pharmaceutical pricing, reimbursement and coverage; potential additional adverse consequences following our resolution with the U.S. government of our FCPA investigation; governmental investigations into sales and marketing practices; potential liability for sales of generic products prior to a final resolution of outstanding patent litigation; product liability claims; increased government scrutiny of our patent settlement agreements; failure to comply with complex Medicare and Medicaid reporting and payment obligations; and environmental risks;
- other financial and economic risks, including: our exposure to currency fluctuations and restrictions as well as credit risks; the significant increase in our intangible assets, which may result in additional substantial impairment charges; potentially significant increases in tax liabilities; and the effect on our overall effective tax rate of the termination or expiration of governmental programs or tax benefits, or of a change in our business;
and other factors discussed in our Annual Report on Form 20-F for the year ended December 31, 2016 (“Annual Report”), including in the section captioned “Risk Factors,” and in our other filings with the U.S. Securities and Exchange Commission, which are available at www.sec.gov and www.tevapharm.com. Forward-looking statements speak only as of the date on which they are made, and we assume no obligation to update or revise any forward-looking statements or other information contained herein, whether as a result of new information, future events or otherwise. You are cautioned not to put undue reliance on these forward-looking statements.
Teva Pharmaceutical Industries Ltd.
Kevin C. Mannix, 215-591-8912
Ran Meir, 972 (3) 926-7516
Tomer Amitai, 972 (3) 926-7656
Iris Beck Codner, 972 (3) 926-7208
Kaelan Hollon, 202-412-7076