WALGREEN CO

WBA may redeem (i) the notes due 2017, at any time in whole or from time to time in part, (ii) the notes due 2019, at any time prior to October 18, 2019 in whole or from time to time prior to October 18, 2019 in part, (iii) the notes due 2021, at any time prior to September 18, 2021 in whole or from time to time prior to September 18, 2021 in part, (iv) the notes due 2024, at any time prior to August 18, 2024 in whole or from time to time prior to August 18, 2024 in part, (v) the notes due 2034, at any time prior to May 18, 2034 in whole or from time to time prior to May 18, 2034 in part, and (vi) the notes due 2044, at any time prior to May 18, 2044 in whole or from time to time prior to May 18, 2044 in part, in each case, at WBA’s option, for an amount equal to the sum of accrued and unpaid interest plus a redemption price equal to the greater of :

(1) 100% of the principal amount of the fixed rate notes being redeemed; and

The terms of the notes will require WBA to retain the proceeds of the notes until the date on which the second step transaction is consummated (the Second Step Closing Date).  In the event that the Second Step Closing Date does not occur on or prior to August 19, 2015 or if the Purchase and Option Agreement is terminated at any time on or prior to August 19, 2015 (each of such events being a Special Mandatory Redemption Trigger), then WBA will redeem in whole and not in part the aggregate principal amount of the notes outstanding at a redemption price equal to 101% of the aggregate principal amount of the notes, plus accrued and unpaid interest from and including the date of the initial issuance, or the most recent date to which interest has been paid, whichever is later.  Upon the occurrence of the Second Step Closing Date, the provisions described in this paragraph will cease to apply.

If WBA experiences a change of control triggering event, unless WBA has exercised its option to redeem the fixed rate notes or has defeased the notes as described in the indenture, WBA will be required to offer payment of cash equal to 101% of the aggregate principal amount of the notes plus accrued and unpaid interest.

On November 10, 2014, the Company and WBA entered into a five-year unsecured, multicurrency revolving credit agreement (the Revolving Credit Agreement), replacing the prior agreements dated July 20, 2011 and July 23, 2012.  The Company will be the initial borrower under the Revolving Credit Agreement.  To the extent the Holdco Reorganization (as defined in the Revolving Credit Agreement) is consummated on or prior to the Alliance Boots Acquisition Closing Date (as defined in the Revolving Credit Agreement) (and subject to the satisfaction (or waiver) of certain other conditions set forth therein), WBA will also be a borrower under the Revolving Credit Agreement.  The new unsecured revolving credit agreement totals $2.25 billion, of which $375 million will be available for the issuance of letters of credit.  The total availability under the facility will increase to $3.0 billion, of which $500 million will be available for the issuance of letters of credit, upon the affirmative vote of the majority of common shares of the Company represented and entitled to vote at the Company’s shareholder meeting to approve the issuance of the necessary shares to complete the second step acquisition of Alliance Boots.  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 the applicable borrower’s option, the alternate base rate or the reserve adjusted Eurocurrency rate, in each case, plus an applicable margin calculated based on the Company’s or, to the extent the Holdco Reorganization is consummated on or prior to the Alliance Boots Acquisition Closing Date, WBA’s credit ratings.  The Company’s ability to access these facilities is subject to compliance with the terms and conditions of the credit facilities, including financial covenants.  The covenants require the Company to maintain certain financial ratios related to the proportion of consolidated debt to total capitalization and priority debt, along with limitations on the sale of assets and purchases of investments.   At November 30, 2014, the Company was in compliance with all such covenants.  Total upfront fees related to the term loan and revolving credit agreement were $14 million.  The Company pays a facility fee to the financing banks to keep these lines of credit active.  At November 30, 2014, there were no letters of credit issued against these credit facilities.

On December 19, 2014, the Company and WBA, entered into a Revolving Credit Agreement (the 364-Day Credit Agreement) with the lenders party thereto and Mizuho Bank, Ltd., as administrative agent.  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 will be equal to $750 million.  The Company will be the initial borrower under the 364-Day Credit Agreement.  To the extent that the Reorg Merger is consummated on or prior to the date of the consummation of the second step transaction (and subject to the satisfaction (or waiver) of certain other conditions set forth therein), WBA will also be a borrower under the 364-Day Credit Agreement.  To the extent the Reorg Merger is consummated on or prior to the date of the consummation of the second step transaction, the Company will guarantee the punctual payment when due, whether at stated maturity, by acceleration or otherwise, of all obligations of WBA under the 364-Day Credit Agreement, which guarantee shall remain in full force and effect until certain conditions are met. 

On December 29, 2014, the Company’s shareholders voted to approve all proposals related to the second step transaction and the Reorg Merger.  The Company currently expects to complete the second step transaction and the Reorg Merger on December 31, subject to the satisfaction of customary closing conditions. 

On December 19, 2014, the Company and WBA, entered into a Revolving Credit Agreement (the 364-Day Credit Agreement) with the lenders party thereto and Mizuho Bank, Ltd., as administrative agent.  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 will be equal to $750 million.  The Company will be the initial borrower under the 364-Day Credit Agreement.  To the extent that the Reorg Merger is consummated on or prior to the date of the consummation of the second step transaction (and subject to the satisfaction (or waiver) of certain other conditions set forth therein), WBA will also be a borrower under the 364-Day Credit Agreement.  To the extent the Reorg Merger is consummated on or prior to the date of the consummation of the second step transaction, the Company will guarantee the punctual payment when due, whether at stated maturity, by acceleration or otherwise, of all obligations of WBA under the 364-Day Credit Agreement, which guarantee shall remain in full force and effect until certain conditions are met.  See the Current Report on Form 8-K filed by the Company on December 24, 2014 for further details.