AbbVie sold $10bn of bonds in nine pieces to help pay for Apogee Therapeutics, and the proceeds cancel an equal amount of bridge loan
Nine tranches. One borrower. Forty years between the shortest maturity and the longest.
AbbVie entered into an underwriting agreement on 4 August with Morgan Stanley, BofA Securities, J.P. Morgan and SG Americas, acting for themselves and as representatives of the several underwriters, to sell $10bn of senior notes in nine separate series. The company disclosed the agreement to the Securities and Exchange Commission on Wednesday afternoon. Settlement is expected on 18 August.
The document does not print a total. It prints nine numbers, and they add to exactly ten billion dollars.
The nine pieces
Floating rate notes due 2028, $500m. Then 4.500 percent notes due 2028, $1bn. Then 4.650 percent due 2030, $1.25bn; 4.875 percent due 2031, $1.5bn; 5.050 percent due 2033, $1.25bn; 5.300 percent due 2036, $1.5bn; 5.450 percent due 2038, $1bn; 6.000 percent due 2056, $1.5bn; and 6.100 percent due 2066, $500m.
The coupon rises at every step out the curve, which is what a normal term structure looks like and is worth saying only because it has not always been true in recent years. The 2066 notes are the outlier at the far end: forty years of money at 6.100 percent, and the smallest tranche in the deal.
Prices to the public ran from 100 percent of principal on the floating rate notes down to 99.441 percent on the 2056 notes.
Where the money goes
Net proceeds, after underwriting discounts and estimated expenses, are expected to be about $9.93bn.
AbbVie states two uses. The first is to fund a portion of its cash payment obligations in connection with its acquisition of Apogee Therapeutics, together with the fees and expenses attached to it. The second is general corporate purposes, which the company says may include repaying or repurchasing outstanding debt.
Then comes the sentence that explains the size of the deal. The net proceeds will reduce commitments under AbbVie's $10.0bn 364-day delayed draw term loan facility, entered into in connection with the same acquisition.
A bridge, taken out at close to par
Read those two figures together and the shape of the financing is visible. A $10.0bn bank facility was arranged to make the acquisition possible. A $10.0bn bond sale is now retiring the commitment under it.
That is the ordinary sequence for a large cash acquisition: banks underwrite the certainty, the bond market provides the permanent money, and the bridge is never fully drawn if the second step works. Here the second step has worked, and the two numbers match to the hundred million.
The filing says nothing about the Apogee Therapeutics transaction itself. No price, no timing, no conditions. For that, this is the wrong document.
One point of care for anyone searching on the name. Apogee Therapeutics is not Apogee Enterprises, the Minneapolis architectural products company, which filed its own unrelated 8-K ten minutes after this one on the same afternoon to elect two directors.
