Express Scripts 2013 Annual Report Download - page 81

81 Express Scripts 2013 Annual Report
current maturities of long-term debt. Upon consummation of the Merger, Express Scripts assumed the obligations of ESI and
became the borrower under the credit agreement.
The credit agreement requires interest to be paid at the LIBOR or adjusted base rate options, plus a margin. The
margin over LIBOR ranges from 1.25% to 1.75% for the term facility and 1.10% to 1.55% for the revolving facility, and the
margin over the base rate options ranges from 0.25% to 0.75% for the term facility and 0.10% to 0.55% for the revolving
facility, depending on our consolidated leverage ratio. Under the credit agreement, we are required to pay commitment fees on
the unused portion of the $1,500.0 million revolving facility. The commitment fee ranges from 0.15% to 0.20% depending on
our consolidated leverage ratio.
BRIDGE FACILITY
On August 5, 2011, ESI entered into a credit agreement with Credit Suisse AG, Cayman Islands Branch, as
administrative agent, Citibank, N.A., as syndication agent, and the other lenders and agents named within the agreement. The
credit agreement provided for a one-year unsecured $14,000.0 million bridge term loan facility (the “bridge facility”). No
amounts were withdrawn under the bridge facility, and subsequent to consummation of the Merger on April 2, 2012, the bridge
facility was terminated.
FIVE-YEAR CREDIT FACILITY
On April 30, 2007, Medco entered into a senior unsecured credit agreement, which was available for general
working capital requirements. The facility consisted of a $1,000.0 million, 5-year senior unsecured term loan and a $2,000.0
million, 5-year senior unsecured revolving credit facility. The facility was due to mature on April 30, 2012. Medco refinanced
the $2,000.0 million senior unsecured revolving credit facility on January 23, 2012. Upon completion of the Merger, the
$1,000.0 million senior unsecured term loan and all associated interest, and the $1,000.0 million then outstanding under the
senior unsecured revolving credit facility, were repaid in full and terminated.
ACCOUNTS RECEIVABLE FINANCING FACILITY
Upon consummation of the Merger, Express Scripts assumed a $600.0 million, 364-day renewable accounts
receivable financing facility that was collateralized by Medco’s pharmaceutical manufacturer rebates accounts receivable. On
September 21, 2012, Express Scripts terminated the facility and repaid all amounts drawn down.
INTEREST RATE SWAP
Medco entered into five interest rate swap agreements in 2004. These swap agreements, in effect, converted $200.0
million of Medco’s $500.0 million of 7.250% senior notes due 2013 to variable interest rate debt. Under the terms of these
swap agreements, Medco received a fixed rate of interest of 7.250% on $200.0 million and paid variable interest rates based on
the six-month LIBOR plus a weighted-average spread of 3.05%. The payment dates under the agreements coincided with the
interest payment dates on the hedged debt instruments and the difference between the amounts paid and received was included
in interest expense. These swaps were settled on May 7, 2012. Express Scripts received $10.1 million for settlement of the
swaps and the associated accrued interest receivable through May 7, 2012, and recorded a loss of $1.5 million related to the
carrying amount of the swaps and bank fees.
SENIOR NOTES
Following the consummation of the Merger on April 2, 2012, several series of senior notes issued by Medco are
reported as debt obligations of Express Scripts on a consolidated basis.
In August 2003, Medco issued $500.0 million aggregate principal amount of 7.250% senior notes due 2013 (the
“August 2003 Senior Notes”). On May 7, 2012, the Company redeemed the August 2003 Senior Notes. These notes were
redeemable at a redemption price equal to the greater of (i) 100% of the principal amount of the notes being redeemed, or
(ii) the sum of the present values of 107.25% of the principal amount of these notes being redeemed, plus all scheduled
payments of interest on the notes discounted to the redemption date at a semi-annual equivalent yield to a comparable U.S.
Treasury security for such redemption date plus 50 basis points. Total cash payments related to these notes were $549.4 million
comprised of principal, redemption costs and interest.
On March 18, 2008, Medco issued $1,500.0 million of senior notes (the “March 2008 Senior Notes”), including:
• $300.0 million aggregate principal amount of 6.125% senior notes due 2013
• $1,200.0 million aggregate principal amount of 7.125% senior notes due 2018