On January 18, 2019, Bristol-Myers Squibb Company ("Bristol-Myers Squibb") reported that it has entered into a Term Loan Agreement (the "Term Loan Agreement") with the lenders party thereto and Morgan Stanley Senior Funding, Inc., as administrative agent (Filing, 8-K, Bristol-Myers Squibb, JAN 18, 2019, View Source [SID1234532805]). The Term Loan Agreement provides for total term loan commitments in an aggregate principal amount of $8.0 billion and reduces the $33.5 bridge facility commitments previously described in the Current Report on Form 8-K filed by Bristol-Myers Squibb with the Securities and Exchange Commission (the "SEC") on January 4, 2019 (the "January 4 Current Report") by such principal amount. The Term Loan Agreement was entered into in connection with the previously announced proposed merger (the "Merger") of a wholly owned subsidiary of Bristol-Myers Squibb with Celgene Corporation ("Celgene"), pursuant to the Agreement and Plan of Merger, dated as of January 2, 2019 (the "Merger Agreement"), among Bristol-Myers Squibb, Celgene and Burgundy Merger Sub, Inc., a wholly-owned subsidiary of Bristol-Myers Squibb, described in the January 4 Current Report.

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The lenders party to the Term Loan Agreement will be obligated to make loans under the Term Loan Agreement upon the satisfaction or waiver of several limited conditions, including but not limited to completion of the Merger, the non-occurrence of a material adverse effect (as such term is defined in the Term Loan Agreement) on Celgene, the accuracy in all material respects of certain representations and warranties related to both Bristol-Myers Squibb and Celgene, the absence of certain defaults by Bristol-Myers Squibb, the delivery of certain financial statements of Bristol-Myers Squibb and Celgene and other customary conditions to completion more fully set forth in the Term Loan Agreement. The date such limited conditions are satisfied or are waived in accordance with the terms of the Term Loan Credit Agreement and the loans thereunder are funded is referred to herein as the "Closing Date."

The term loan facility under the Term Loan Agreement consists of a $1 billion 364-day tranche, a $4 billion three-year tranche and a $3 billion five-year tranche. Borrowings under the Term Loan Agreement will be unsecured. The term loans are pre-payable without premium or penalty (but subject to breakage costs, if applicable). The term loans under the $1 billion 364-day and the $4 billion three-year tranche do not amortize. The five-year tranche amortizes in equal quarterly amounts equal to (i) 0.0% from after the Closing Date to, and including, the third anniversary of the Closing Date and (ii) 10% per annum from after the third anniversary to, and including, the five-year anniversary of the Closing Date. The $1 billion tranche of the term loan facility will mature and be payable on the 364-day anniversary of the Closing Date. The $4 billion tranche of the term loan facility will mature and be payable on the third anniversary of the Closing Date. The $3 billion tranche of the term loan facility will mature and be payable (to the extent not amortized) on the fifth anniversary of the Closing Date.

At the option of Bristol-Myers Squibb, borrowings under the Term Loan Agreement will bear interest at either a base rate or at the Eurodollar rate, plus, in each case, an applicable margin. The applicable margin will range from (i) with respect to the $1 billion 364-day tranche, 0.0 – 0.125% with respect to base rate borrowings, and 0.75 – 1.125% with respect to Eurodollar rate borrowings, (ii) with respect to the $4 billion three-year tranche, 0.0 – 0.25% with respect to base rate borrowings, and 0.875 – 1.25% with respect to Eurodollar rate borrowings, and (iii) with respect to the $3 billion five-year tranche, 0.0 – 0.375% with respect to base rate borrowings, and 1.00 – 1.375% with respect to Eurodollar rate borrowings in each case, based on the public ratings of Bristol-Myers Squibb’s non-credit enhanced senior unsecured long-term debt, as set forth in the Term Loan Agreement. The base rate will be, for any day, a fluctuating rate per annum equal to the highest of (i) the rate last quoted by The Wall Street Journal as the "Prime Lending Rate" (if more than one rate is published as the Prime Lending Rate, then the highest of such rates), (ii) the Federal Funds effective rate plus 0.5% and (iii) the one-month reserve adjusted Eurodollar Rate plus 1% (provided, that the reserve adjusted Eurodollar Rate shall not be less than zero). The Eurodollar rate will be an annual rate equal to the London Interbank Offered Rate. Pursuant to the base rate option, interest will be calculated on the basis of the actual number of days elapsed in a year of 365 or 366 days and will be payable quarterly in arrears. Alternatively, under the Eurodollar rate option, interest will be determined based on interest periods to be selected by Bristol-Myers Squibb of one, two, three or six months, will be calculated on the basis of the actual number of days elapsed in a year of 360 days and will be payable at the end of each interest period (and at the end of every three months, in the case of interest periods longer than three months).

The Term Loan Agreement contains certain covenants relating to the following subjects: legal existence; business and properties; delivery of financial statements, reports, etc.; maintenance of insurance; obligations and payment of taxes; litigation and other notices; books and records; maintenance of ratings; compliance with laws; limitations on mergers, sales of assets and consolidations; limitations on liens; limitations on sale and leaseback transactions; and sanctions, anti-corruption laws and guaranties.

The Term Loan Agreement also contains certain events of default, limited to nonpayment of principal when due; nonpayment of interest, fees or other amounts after a three business day grace period; material inaccuracy of representations and warranties; violation of covenants (subject, in the case of certain affirmative covenants, to certain grace periods); cross-payment default and cross-acceleration; bankruptcy events; material judgments; change of control; certain ERISA events; and to the extent there are any guarantees of the term facility then in effect, actual or asserted invalidity of such guarantees under the Term Loan Agreement.

The description of the Term Loan Agreement contained in this item 1.01 does not purport to be complete and is qualified in its entirety by reference to the full text of the Term Loan Agreement, a copy of which is filed hereto as Exhibit 10.1 to this Current Report on Form 8-K, and the terms of which are incorporated herein by reference.
The representations, warranties and covenants contained in the Term Loan Agreement were made only for purposes of such agreement and as of the dates specified therein, were solely for the benefit of the parties thereto and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors. Investors should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of Bristol-Myers Squibb and its subsidiaries. Moreover, information concerning the subject matter of any representations, warranties and covenants may change after the dates of the Term Loan Agreement, which subsequent information may or may not be fully reflected in public disclosures by Bristol-Myers Squibb.

Certain of the financial institutions party to the Term Loan Agreement, either directly or through affiliates, have performed, and may in the future perform, various commercial banking, investment banking and other financial advisory services in the ordinary course of business for Bristol-Myers Squibb and in connection with the Merger for which they have received, and will receive, customary fees and commissions.