LabCorp 2014 Annual Report Download - page 60

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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. 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
Company’s acquisition of Covance. 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 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 credit 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 1.00, calculated by excluding the $2,900.0 Acquisition Notes. From and after the acquisition closing date,
the leverage ratio must be no greater than 4.75 to 1.00 with respect to the last day of each of the first four fiscal quarters ending
on or after the closing date, 4.25 to 1.00 with respect to the last day of each of the fifth through eighth fiscal quarters ending after
the closing date, and 3.75 to 1.00 with respect to the last day of each fiscal quarter ending thereafter. The Company was in
compliance with all covenants in the term loan credit 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.
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 funds rate plus a
margin ranging from 0.125% to 1.00%. Advances under the new revolving 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 1.00 to 1.60%, or a base rate determined
according to a prime rate or federal funds rate plus a margin ranging from 0.00% to 0.60%. Fees are payable on outstanding letters
of credit under the new revolving credit facility at a per annum rate equal to the applicable margin for LIBOR loans, and the
Company is required to pay a facility fee on the aggregate commitments under the new revolving credit facility, at a per annum
rate ranging from 0.125% to 0.40%. The 60-day cash bridge 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 1.25% to 2.00%, or a base rate determined according
to a prime rate or federal funds rate plus a margin ranging from 0.25% to 1.00%. In each case, the interest margin applicable to
the credit facilities, and the facility fee and letter of credit fees payable under the new revolving credit facility, are based on the
Company’s senior credit ratings as determined by Standard & Poor’s and Moody’s, which are currently BBB and Baa2, respectively.
There were no balances outstanding on the Company's new Revolving Credit Facility at December 31, 2014 or on its former
Revolving Credit Facility at December 31, 2013.
As of December 31, 2014, the effective interest rate on the new Revolving Credit Facility was 1.1%.