LabCorp 2014 Annual Report Download - page 100

F-21
only in a single drawing on the closing date of the Acquisition.
On December 19, 2014, the Company entered into a five-year term loan credit facility in the principal amount of $1,000.0
for the purpose of financing a portion of the cash consideration and the fees and expenses in connection with the transactions
contemplated by the Merger Agreement. Pursuant to the bridge facility commitment letter, upon the Company’s entry into the
term loan credit facility, the $4,250.0 bridge facility was reduced to a$3,250.0 commitment, comprising a $2,850.0 364-day
unsecured debt bridge tranche and a $400.0 60-day cash bridge tranche. The$1,000.0 of term loan commitments made under
the term loan credit facility reduced the debt bridge tranche under the bridge facility dollar for dollar.
The term loan credit facility was advanced in full on February 19, 2015, the date of the Company’s completion of the
acquisition. The term loan credit facility will mature five years after the closing date of the Acquisition and may be prepaid
without penalty.
On December 19, 2014, the Company also entered into an amendment and restatement of its existing senior revolving
credit facility, which was originally entered into on December 21, 2011. The senior revolving credit facility consists of a five-
year revolving facility in the principal amount of up to $1,000.0, with the option of increasing the facility by up to an additional
$250.0, subject to the agreement of one or more new or existing lenders to provide such additional amounts and certain other
customary conditions. The new revolving credit facility also provides for a subfacility of up to $100.0 for swing line borrowings
and a subfacility of up to $125.0 for issuances of letters of credit. The new revolving credit facility is permitted to be used for
general corporate purposes, including working capital, capital expenditures, funding of share repurchases and certain other
payments, and acquisitions and other investments.
On January 30, 2015, the Company issued the Acquisition Notes, which represent $2,900.0 in debt securities consisting
of $500.0 aggregate principal amount of 2.625% Senior Notes due 2020, $500.0 aggregate principal amount of 3.20% Senior
Notes due 2022, $1,000.0 aggregate principal amount of 3.60% Senior Notes due 2025 and $900.0 aggregate principal amount
of 4.70% Senior Notes due 2045. Net proceeds from the offering of the Acquisition Notes were $2,870.2 after deducting
underwriting discounts and other estimated expenses of the offering. Net proceeds were used to pay a portion of the cash
consideration and the fees and expenses in connection with the Covance acquisition. Pursuant to the bridge facility commitment
letter, upon the Company’s issuance of the Acquisition Notes the remaining $2,850.0 364-day unsecured debt bridge tranche
under the senior unsecured bridge term loan credit facility was terminated.
On February 13, 2015, the Company entered into a 60-day cash bridge term loan credit facility in the principal amount
of $400.0 for the purpose of financing a portion of the cash consideration and the fees and expenses in connection with the
transactions contemplated by the Merger Agreement. The 60-day cash bridge term loan credit facility was entered into on the
terms set forth in the bridge facility commitment letter for the $400.0 60-day cash bridge tranche.
The 60-day cash bridge term loan credit facility was advanced in full on February 19, 2015, the date of the Company’s
completion of the Acquisition. The 60-day cash bridge term loan credit facility will mature 60 days after the closing date of
the Acquisition and may be prepaid without penalty. The 60-day cash bridge term loan credit facility is subject to mandatory
prepayment upon the receipt by the Company of net cash proceeds from certain asset dispositions, debt issuances, or equity
issuances.
Under the term loan facility and the new revolving credit facility and the 60-day cash bridge term loan credit facility,
which have affirmative and negative covenants that are substantially identical, the Company is subject to negative covenants
limiting subsidiary indebtedness and certain other covenants typical for investment grade-rated borrowers and the Company
is required to maintain a leverage ratio that varies. Prior to the acquisition closing date, the leverage ratio was required to have
been no greater than 3.75 to 1.0 calculated by excluding the $2,900.0 in total aggregate principal amount of the Company's
senior notes issued for the purpose of funding the acquisition. From and after the acquisition closing date, the leverage ratio
must be no greater than 4.75 to 1.0 with respect to the last day of each of the first four fiscal quarters ending on or after the
closing date, 4.25 to 1.0 with respect to the last day of each of the fifth through eighth fiscal quarters ending after the closing
date, and 3.75 to 1.0 with respect to the last day of each fiscal quarter ending thereafter. The Company was in compliance with
all covenants in the term loan facility and the new revolving credit facility at December 31, 2014. As of December 31, 2014,
the ratio of total debt to consolidated EBITDA was 2.5 to 1.0.
When advanced, the term loan credit facility will accrue interest at a per annum rate equal to, at the Company’s election,
either a LIBOR rate plus a margin ranging from 1.125% to 2.00%, or a base rate determined according to a prime rate or federal
LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars and shares in millions, except per share data)