Takeda: Hybrid Bonds to Replace Senior Short Term Loan

Takeda Pharmaceutical Company Limited (TSE:4502/NYSE:TAK) (“Takeda”) today announced that it filed with the Director of the Kanto Local Finance Bureau a shelf registration statement for the issuance of up to 500 billion Japanese yen aggregate principal amount of bonds and an amended shelf registration statement in connection with its potential public offering of hybrid bonds (subordinated bonds) (the “Hybrid Bonds”). This Hybrid bond issuance is to replace all or a part of the existing Short Term Loan (the “SSTL”) and won’t increase debt outstanding in total as shown on the table 1.1. The details are as follows.

1. Overviews

Although Takeda has previously entered into the Subordinated Syndicated Loan Agreement (the “Subordinated Loan Agreement”) with total commitments of 500 billion Japanese yen to be used to refinance the indebtedness incurred pursuant to SSTL, Takeda plans to issue a maximum aggregate principal amount of 500 billion Japanese yen of Hybrid Bonds for the purpose of substituting all or a part of the amounts available under the Subordinated Loan Agreement, none of which has been drawn at this stage.

1.1 Actual and Expected Outstanding under each Facility as of the dates stated:

See table here (https://www.takeda.com/newsroom/newsreleases/2019/notice-regarding-issue-of-hybrid-bonds-to-replace-senior-short-term-loan–offering-of-subordinated-bonds/)

2. Purpose and Background to the Hybrid Bond Issue

As announced in “Notice regarding the Acquisition of the Entire Issued and To Be Issued Share of Shire plc” by Takeda Pharmaceutical Company Limited” on January 8, 2019, Takeda acquired all of the shares of Shire plc (“Shire”) and completed its acquisition of Shire as of January 8, 2019. In the process of this acquisition, as announced in “Takeda Announces Execution of Senior Short Term Loan Facility Agreement and Subordinated Syndicated Loan Agreement and Second Amendment to Bridge Credit Agreement in Connection with Proposed Acquisition of Shire plc” on October 26, 2018. Takeda entered into the SSTL for an aggregate principal amount of up to 500 billion Japanese yen. The SSTL financed a portion of the funds necessary for the acquisition of Shire. Takeda has also entered into the Subordinated Loan Agreement for an aggregate principal amount of up to 500 billion Japanese yen in order to refinance the borrowings under the SSTL. Despite execution of the Subordinated Loan Agreement, Takeda plans to issue a maximum aggregate principal amount of 500 billion Japanese yen of Hybrid Bonds for the purpose of substituting all or a part of the amounts available under the Subordinated Loan Agreement, none of which has been drawn at this stage.

3. Features of the Hybrid Bonds

The Hybrid Bonds will be containing features of both equity and liabilities. While the liability aspects of the Hybrid Bonds will not cause dilution to stockholders, the Hybrid Bonds will have attributes and features resembling equity such as an option to defer interest payments, extremely long-term redemption periods and subordination in liquidation or bankruptcy proceedings. Therefore, Takeda expects that Japan Credit Rating Agency, Ltd. and S&P Global Ratings Japan Inc. will deem 50% of the funds raised under the Hybrid Bonds as equity for the purposes of their ratings. A summary of the expected terms and conditions of the Hybrid Bonds, which is preliminary and subject to change, has been provided as Attachment 1 hereto.

https://www.marketscreener.com/TAKEDA-PHARMACEUTICAL-CO-6491073/news/Takeda-Pharmaceutical-Notice-Regarding-Issue-of-Hybrid-Bonds-to-Replace-Senior-Short-Term-Loan-28022731/