Walgreens 2015 Annual Report Download - page 55

Second Step Transaction, the available credit increased to $3.0 billion, of which $500 million is available for the
issuance of letters of credit. The issuance of letters of credit reduces the aggregate amount otherwise available
under the Revolving Credit Agreement for the making of revolving loans. Borrowings under the Revolving
Credit Agreement will bear interest at a fluctuating rate per annum equal to, at our option, the alternate base rate
or the reserve adjusted LIBOR, in each case, plus an applicable margin calculated based on our credit ratings.
Total upfront fees related to the Term Loan Agreement and Revolving Credit Agreement were $14 million. We
pay a facility fee to the financing banks to keep these lines of credit active. At August 31, 2015, there were no
borrowings or letters of credit issued against the revolving credit facility.
Walgreens guaranteed the punctual payment when due, whether at stated maturity, by acceleration or otherwise,
of all obligations of Walgreens Boots Alliance under the Term Loan Agreement and the Revolving Credit
Agreement until August 10, 2015, when such guarantees were unconditionally released and discharged (as
described below). See Note 10, Short-Term Borrowings and Long-Term Debt, to the Consolidated Financial
Statements included in Part II, Item 8 of this Form 10-K.
On November 18, 2014, the Company issued several series of unsecured, unsubordinated notes totaling $8.0
billion with maturities ranging from 2016 to 2044. All notes issued on November 18, 2014 have fixed interest
rates, with the exception of the $750 million notes due 2016 which have a floating rate based on the three-month
LIBOR plus a fixed spread of 45 basis points.
On November 20, 2014, the Company issued a series of unsecured, unsubordinated notes that included total
Pound Sterling denominated debt of £700 million ($1.1 billion based on the November 20, 2014 exchange rate)
with maturities due 2020 and 2025 and Euro denominated debt of €750 million ($940 million based on the
November 20, 2014 exchange rate) due 2026. All notes issued on November 20, 2014 have fixed interest rates.
The notes issued on November 18, 2014 and November 20, 2014 are collectively referred to as the WBA notes.
The WBA notes were, upon initial issuance, fully and unconditionally guaranteed on an unsecured and
unsubordinated basis by Walgreens. See Note 10, Short-Term Borrowings and Long-Term Debt, to the
Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K.
On December 19, 2014, Walgreens Boots Alliance and Walgreens entered into a Revolving Credit Agreement
(the “364-Day Credit Agreement”) with the lenders party thereto. The 364-Day Credit Agreement is a 364-day
unsecured, multicurrency revolving facility. The aggregate commitment of all lenders under the 364-Day Credit
Agreement is $750 million. The Company pays a facility fee to the financing banks to keep this line of credit
active. At August 31, 2015, there were no borrowings against the 364-Day Credit Agreement. On July 9, 2015,
the 364-Day Credit Agreement was amended to remove Walgreens as a borrower thereunder, eliminate
Walgreens’ guarantee of all obligations of Walgreens Boots Alliance thereunder and make certain conforming
changes to effectuate those modifications, including modifications and deletions of certain definitions and cross-
references.
The 364-Day Credit Agreement and the Term Loan Agreement and Revolving Credit Agreement described
above each contain a covenant to maintain, as of the last day of each fiscal quarter, a ratio of consolidated debt to
total capitalization not to exceed 0.60 to 1.00, as well as other customary restrictive covenants. At August 31,
2015, we were in compliance with all such covenants.
In addition, on July 9, 2015, pursuant to an indenture, dated as of July 17, 2008, between Walgreens and Wells
Fargo Bank, National Association, as trustee, notices of redemption were given to (i) holders of 1.800%
unsecured notes due 2017 (the “2017 Notes”) and (ii) holders of 5.25% unsecured notes due 2019 (the “2019
Notes”), in each case issued by Walgreens under the Indenture. As a result, on August 10, 2015 (the “redemption
date”), the 2017 Notes in the aggregate principal amount of $1.0 billion were redeemed in full and $750 million
aggregate principal amount of the 2019 Notes were redeemed. The partial redemption of the 2019 Notes resulted
in $250 million aggregate principal amount of 2019 Notes remaining outstanding. The redemption price with
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