Walgreens 2015 Annual Report Download - page 95

Extinguishment of Debt Assumed in Second Step Transaction
As a result of the Second Step Transaction (see Note 8, Acquisitions), the Company assumed $9.0 billion of
Alliance Boots existing debt. In January 2015, the Company repaid substantially all of the assumed debt with
proceeds from the November 2014 debt issuances described below.
$8.0 Billion Note Issuance
On November 18, 2014, Walgreens Boots Alliance received net proceeds (after deducting underwriting discounts
and estimated offering expenses) of $7.9 billion from a public offering of notes with varying maturities and interest
rates, the majority of which are fixed rate. The notes are unsecured, unsubordinated debt obligations of Walgreens
Boots Alliance and rank equally in right of payment with all other unsecured and unsubordinated indebtedness of
Walgreens Boots Alliance from time to time outstanding. The notes were fully and unconditionally guaranteed on
an unsecured and unsubordinated basis by Walgreens until August 10, 2015, when such guarantees were
unconditionally released and discharged (as described below). Total issuance costs relating to the notes, including
underwriting discounts and estimated offering expenses, were $44 million. The fair value of the notes as of
August 31, 2015 was $7.8 billion. Fair value for these notes was determined based upon quoted market prices.
The following table summarizes each tranche of notes issued:
Notes Issued
(in millions) Maturity Date Interest Rate Interest Payment Dates
$ 750 May 18, 2016 Variable; three-month U.S. dollar
LIBOR, reset quarterly, plus 45 basis
points
February 18, May 18, August 18, and
November 18; commencing on
February 18, 2015
750 November 17, 2017 Fixed 1.750% May 17 and November 17;
commencing on May 17, 2015
1,250 November 18, 2019 Fixed 2.700% May 18 and November 18;
commencing on May 18, 2015
1,250 November 18, 2021 Fixed 3.300% May 18 and November 18;
commencing on May 18, 2015
2,000 November 18, 2024 Fixed 3.800% May 18 and November 18;
commencing on May 18, 2015
500 November 18, 2034 Fixed 4.500% May 18 and November 18;
commencing on May 18, 2015
1,500 November 18, 2044 Fixed 4.800% May 18 and November 18;
commencing on May 18, 2015
$8,000
Former Walgreens Guarantee
Upon issuance, the notes were guaranteed on an unsecured and unsubordinated basis by Walgreens pursuant to a
guarantee agreement dated as of November 18, 2014. Pursuant to the terms of the Guarantee Agreement, such
Guarantee Agreement would automatically terminate, and Walgreens’ obligations thereunder would be
unconditionally released and discharged, if and when (i) the aggregate outstanding principal amount of Capital
Markets Indebtedness, including the Existing Notes, and Commercial Bank Indebtedness (as each such
capitalized term is defined in the Guarantee Agreement), in each case, of Walgreens is less than $2.0 billion and
(ii) Walgreens does not guarantee any Capital Markets Indebtedness (other than the notes or the Euro/Sterling
notes issued on November 20, 2014 described below) or Commercial Bank Indebtedness, in each case, of the
Walgreens Boots Alliance. Once released in accordance with its terms, the guarantees will not subsequently be
required to be reinstated. On August 10, 2015, as a result of the redemption of certain notes of Walgreens
described below, the Guarantee Agreement was automatically terminated in accordance with its terms, without
penalty to Walgreens or Walgreens Boots Alliance, and the obligations of Walgreens thereunder were
unconditionally released and discharged.
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