Cardinal Health 2009 Annual Report Download - page 134

loan facility will not be drawn upon and will be terminated upon Spin-Off. The net proceeds of the notes were
placed into an escrow account and will be used to fund the $1.4 billion cash distribution to the Company. On
August 27, 2009, the Company announced it will use up to $1.2 billion of the cash distribution to fund a debt
tender offer for certain of its outstanding debt securities (other than the 7.80% Debentures due October 15, 2016
of Allegiance Corporation and the 7.00% Debentures due October 15, 2026 of Allegiance Corporation, the tender
offer for which will be funded with the Company’s cash on hand, as further described below). The remainder of
the cash distribution will be used to pay off debt maturing in the second quarter of fiscal 2010. See discussion
below for additional detail of the debt securities subject to the debt tender offer.
As noted above, on July 1, 2009, CareFusion entered into a senior unsecured bridge loan facility (the
“bridge loan facility”) that could provide financing for an aggregate principal amount of $1.4 billion, with a term
of 364 days from the date of funding under such facility. Funding under the bridge loan facility was subject to
certain closing conditions, including but not limited to completion of the Spin-Off. In connection with the bridge
loan facility, the Company paid $17.5 million in underwriting and other fees.
On July 14, 2009, CareFusion obtained permanent financing through the sale of $250.0 million aggregate
principal amount of 4.125% senior notes due 2012, $450.0 million aggregate principal amount of 5.125% senior
notes due 2014 and $700.0 million aggregate principal amount of 6.375% senior notes due 2019 in a private
placement. The initial purchasers then sold the Notes to qualified institutional buyers. The Notes are senior
unsecured obligations of CareFusion and rank equally with all of CareFusion’s existing and future unsecured
senior debt and senior to all of the CareFusion’s existing and future subordinated debt. The Notes are effectively
subordinated to the liabilities of CareFusion’s subsidiaries, including trade payables and the guarantees by certain
of its subsidiaries of CareFusion’s revolving credit facilities. The Notes also effectively rank junior in right of
payment to any existing and future secured debt of CareFusion to the extent of the value of the assets securing
such debt. Proceeds from the sale of the Notes were deposited in an escrow account to be released in connection
with the Spin-Off.
On August 27, 2009, the Company announced that it commenced a cash tender offer for an aggregate
purchase price, including an early tender premium but excluding accrued interest, fees and expenses, of up to
$1.2 billion of the following series of debt securities (listed in order of acceptance priority): (i) 7.80% Debentures
due October 15, 2016 of Allegiance Corporation; (ii) 6.75% Notes due February 15, 2011 of the Company;
(iii) 6.00% Notes due June 15, 2017 of the Company; (iv) 7.00% Debentures due October 15, 2026 of Allegiance
Corporation; (v) 5.85% Notes due December 15, 2017 of the Company; (vi) 5.80% Notes due October 15, 2016
of the Company; (vii) 5.65% Notes due June 15, 2012 of the Company; (viii) 5.50% Notes due June 15, 2013 of
the Company; and (ix) 4.00% Notes due June 15, 2015 of the Company. The amount of each series of debt
securities that is purchased will be based on a $1.2 billion cap and the order of priority set forth above, and may
be subject to proration in accordance with the terms of the tender offer. In addition, the Company is only offering
to purchase 7.00% Debentures due October 15, 2026 of Allegiance Corporation with an aggregate purchase
price, excluding accrued interest, fees and expenses, of up to $100,000,000 in the tender offer. The Company
intends to fund the purchase of the 7.80% Debentures due October 15, 2016 of Allegiance Corporation and the
7.00% Debentures due October 15, 2026 of Allegiance Corporation from cash on hand. If 7.00% Debentures due
2026 are tendered such that the aggregate purchase price for the notes would exceed $100 million, they will be
subject to proration. The tender offer is conditioned upon the Company’s receipt of the approximately $1.4
billion cash distribution from CareFusion and other customary conditions. The offer will expire on September 24,
2009, unless extended or earlier terminated by the Company.
In preparation for the Spin-Off, on July 1, 2009, CareFusion entered into revolving credit facilities with an
aggregate principal balance of $720.0 million, with commitments thereunder allocated $240 million to a 364-day
revolving credit facility and $480 million to a three-year revolving credit facility. The commitment under the
three-year facility is subject to increase, upon request, by up to an aggregate of $30.0 million, subject to
commitments from lenders. Funding under the revolving credit facilities will be subject to certain closing
conditions, including but not limited to the completion of the Spin-Off. The revolving credit facilities are subject
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