Medtronic 2014 Annual Report Download - page 136

Medtronic, Inc.
Notes to Consolidated Financial Statements (Continued)
shareholders will own approximately 30 percent of New Medtronic on a fully diluted basis. Shares of New Medtronic are
expected to trade on the New York Stock Exchange.
The Transaction Agreement may be terminated by mutual written consent of the parties. The Transaction Agreement also
contains certain termination rights, including, among others, the right of either party to terminate if (a) the Arrangement has not
become effective by March 15, 2015 (the End Date), subject to certain conditions, provided that the End Date will be extended
to June 15, 2015 in certain circumstances, (b) the Covidien or Medtronic shareholder approvals are not obtained, (c) the other
party breaches its representations and covenants and such breach would result in the closing conditions not being satisfied,
subject to a cure period, (d) the Irish High Court declines to sanction the Arrangement, unless both parties agree to appeal the
decision, or (e) there is a failure of the tax condition as described in Medtronic’s Current Report on Form 8-K filed with the
SEC on June 16, 2014. Covidien also has the right, prior to the receipt of Covidien shareholder approval, to terminate the
Transaction Agreement to accept a Covidien Superior Proposal (as defined in the Transaction Agreement) in certain
circumstances.
The Transaction Agreement also provides that Medtronic must pay Covidien a termination fee of $850 million if the
Transaction Agreement is terminated because the Medtronic board of directors changes its recommendation for the transaction
and the Medtronic shareholders vote against the Transaction, and either (i) Covidien obtained the requisite Covidien shareholder
approval or (ii) Medtronic effected such termination prior to the completion of the Covidien shareholder meeting.
The consummation of the Pending Acquisition is subject to certain conditions, including approvals by Medtronic and Covidien
shareholders. In addition, the proposed transaction requires regulatory clearances in the U.S., the E.U., China, and certain other
countries. The Pending Acquisition is expected to close in the fourth calendar quarter of 2014 or early 2015. Covidien is a
global health care products company that creates innovative medical solutions for better patient outcomes and delivers value
through clinical leadership and excellence. Covidien develops, manufactures, and sells a diverse range of industry-leading
medical device and supply products.
On June 15, 2014, Medtronic entered into a 364-day senior unsecured bridge credit agreement (the “Bridge Credit Agreement”)
among Medtronic, New Medtronic, the lenders from time to time party thereto and Bank of America, N.A., as administrative
agent. Under the Bridge Credit Agreement, Bank of America, N.A. has committed to provide Medtronic with unsecured
financing in an aggregate principal amount of up to $2.8 billion. The commitments are intended to be drawn to finance, in part,
the cash component of the acquisition consideration and certain transaction expenses to the extent Medtronic does not arrange
for alternative financing prior to the consummation of the Pending Acquisition. New Medtronic has guaranteed the obligations
of Medtronic under the Bridge Credit Agreement. If Medtronic draws loans under the Bridge Credit Agreement, it intends to
refinance any debt incurred thereunder.
Medtronic will require an additional $13.5 billion in order to finance the cash component of the acquisition consideration and
certain transaction expenses. Medtronic expects to have cash equivalents in such amount available to it by the time of the
consummation of the Pending Acquisition. In order to backstop the anticipated amount of cash on hand at the consummation of
the Pending Acquisition, on June 15, 2014, IrSub entered into a 60-day senior unsecured cash bridge credit agreement (the
“Cash Bridge Credit Agreement” and together with the Bridge Credit Agreement, the “Credit Agreements”) among IrSub, New
Medtronic, the lenders from time to time party thereto and Bank of America as administrative agent. Under the Cash Bridge
Credit Agreement, Bank of America, N.A. has committed to provide IrSub with unsecured financing in an aggregate principal
amount of up to $13.5 billion for a 60-day period. New Medtronic has also guaranteed the obligations of IrSub under the Cash
Bridge Credit Agreement and each of Medtronic and Covidien has agreed to provide additional guarantees of such obligations
following the consummation of the Pending Acquisition. Loans drawn under the Cash Bridge Credit Agreement are expected to
be repaid from cash equivalents liquidated by Medtronic.
The funding of the loans under each Credit Agreement (the Closing Date) is conditioned on, among other things, the
consummation of the Pending Acquisition and the absence of certain events of defaults described in each Credit Agreement.
The commitments under each Credit Agreement automatically terminate on the earliest of (a) the funding and disbursement of
the loans to the borrower on the Closing Date, (b) the occurrence of certain mandatory cancellation events or (c) March 15,
2015 (or if all but certain conditions under the Transaction Agreement have been completed, one year after June 15, 2015).
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