Note 6. Borrowings

Borrowings consist of the following (all amounts are presented in millions of U.S. dollars and debt issuances are denominated in U.S. dollars, unless otherwise noted)

	November 30, 2016		August 31, 2016
Short-Term Borrowings⁽¹⁾
1.750% unsecured notes due 2017⁽⁵⁾⁽⁷⁾	$	748	$	-
Unsecured Pound Sterling variable rate term loan due 2019		68		63
Other⁽²⁾		279		260
Total short-term borrowings	$	1,095	$	323

Long-Term Debt⁽¹⁾
Unsecured Pound Sterling variable rate term loan due 2019	$	1,735	$	1,833
$6 Billion Note Issuance⁽⁵⁾⁽⁷⁾
1.750% unsecured notes due 2018		1,247		1,246
2.600% unsecured notes due 2021		1,493		1,493
3.100% unsecured notes due 2023		745		744
3.450% unsecured notes due 2026		1,886		1,885
4.650% unsecured notes due 2046		590		590
$8 Billion Note Issuance⁽⁵⁾⁽⁷⁾
1.750% unsecured notes due 2017		-		746
2.700% unsecured notes due 2019		1,245		1,244
3.300% unsecured notes due 2021		1,242		1,242
3.800% unsecured notes due 2024		1,987		1,987
4.500% unsecured notes due 2034		494		494
4.800% unsecured notes due 2044		1,492		1,492
£700 Million Note Issuance^(1)(5)(7)
2.875% unsecured Pound Sterling notes due 2020		495		521
3.600% unsecured Pound Sterling notes due 2025		371		391
€750 Million Note Issuance^(1)(5)(7)
2.125% unsecured Euro notes due 2026		790		830
$4 Billion Note Issuance⁽⁶⁾⁽⁷⁾
3.100% unsecured notes due 2022		1,194		1,194
4.400% unsecured notes due 2042		492		492
$1 Billion Note Issuance⁽⁶⁾⁽⁷⁾
5.250% unsecured notes due 2019⁽³⁾		249		249
Other⁽⁴⁾		30		32
Total long-term debt, less current portion	$	17,777	$	18,705

⁽¹⁾	All notes are presented net of unamortized discount and debt issuance costs, where applicable, and foreign currency denominated borrowings have been translated using the spot rates at November 30, 2016 and August 31, 2016, respectively.

⁽²⁾	Other short-term borrowings represent a mix of fixed and variable rate borrowings with various maturities and working capital facilities denominated in various foreign currencies.

⁽³⁾	Includes interest rate swap fair market value adjustments. See Note 8, Fair Value Measurements for additional fair value disclosures.

⁽⁴⁾	Other long-term debt represents a mix of fixed and variable rate borrowings in various foreign currencies with various maturities.

⁽⁵⁾	Notes are unsubordinated debt obligations of Walgreens Boots Alliance and rank equally in right of payment with all other unsecured and unsubordinated indebtedness of Walgreens Boots Alliance from time to time outstanding.

⁽⁶⁾

Notes are senior debt obligations of Walgreens and rank equally with all other unsecured and unsubordinated indebtedness of Walgreens. On December 31, 2014, Walgreens Boots Alliance fully and unconditionally guaranteed the outstanding notes on an unsecured and unsubordinated basis. The guarantee, for so long as it is in place, is an unsecured, unsubordinated debt obligation of Walgreens Boots Alliance and will rank equally in right of payment with all other unsecured and unsubordinated indebtedness of Walgreens Boots Alliance.

⁽⁷⁾

The fair value & carrying value of the $6 billion, $8 billion, £0.7 billion, €0.75 billion, $4 billion and $1 billion note issuances as of November 30, 2016 was $5.9 billion & $6.0 billion, $7.3 billion & $7.2 billion, $0.9 billion & $0.9 billion, $0.8 billion & $0.8 billion, $1.7 billion & $1.7 billion and $0.3 billion & $0.2 billion, respectively. The fair values of the notes outstanding are Level 1 fair value measures and determined based on quoted market price and translated at the November 30, 2016 spot rate, as applicable.

$6.0 Billion Note Issuance

On June 1, 2016, Walgreens Boots Alliance received net proceeds (after deducting underwriting discounts and offering expenses) of $6.0 billion from a public offering of five series of U.S. dollar notes with varying maturities and interest rates. Total issuance costs relating to the notes, including underwriting discounts and offering expenses, were $30 million. In the event that the merger contemplated by the Agreement and Plan of Merger dated as of October 27, 2015 among the Company, Rite Aid Corporation (“Rite Aid”) and Victoria Merger Sub, Inc., a wholly-owned subsidiary of the Company (the “Merger Agreement”) is not consummated on or prior to June 1, 2017 (the first anniversary of the issuance date of the notes) or if the Merger Agreement is terminated at any time on or prior to June 1, 2017, then Walgreens Boots Alliance will be required to redeem the notes due 2018, the notes due 2021 and the notes due 2023 (but not the notes due 2026 or notes due 2046) on the date described in the applicable note at a redemption price equal to 101% of the aggregate principal amount of the notes to be redeemed, plus accrued and unpaid interest from and including the date of initial issuance, or the most recent date to which interest has been paid, whichever is later, to, but excluding, the date of redemption.

The notes issued on June 1, 2016 contain redemption terms which allow or require the Company to redeem the notes at defined redemption prices plus accrued and unpaid interest at redemption dates set forth in the applicable series of notes. Interest on the notes issued on June 1, 2016 is payable semi-annually.

Bridge Credit Agreement, 2015 Term Loan Credit Agreement and 2016 Term Loan Credit Agreement

On October 27, 2015, in connection with the pending acquisition of Rite Aid Corporation (the “Acquisition”), the Company entered into a $12.8 billion bridge credit facility commitment letter (as amended and restated, the “Bridge Commitment Letter”).

On December 18, 2015, the Company entered into a Bridge Term Loan Credit Agreement with the lender party thereto (as amended, the “Bridge Credit Agreement”) and a Term Loan Credit Agreement with the lenders party thereto (as amended, the “2015 Term Loan Credit Agreement”). The Bridge Commitment Letter and the commitments contemplated thereby terminated upon the Company entering into the Bridge Credit Agreement and the 2015 Term Loan Credit Agreement. The Bridge Credit Agreement is a 364-day unsecured bridge term loan facility and had initial aggregate commitments of $7.8 billion, which may be increased by the Company prior to the funding of the loans thereunder by up to $2.0 billion in certain circumstances. As a result of the issuance of the notes and receipt of proceeds therefrom on June 1, 2016 as described above and the entry into the term loan credit agreement on August 30, 2016 as described below, the Company reduced the commitment under the Bridge Credit Agreement by approximately $6.0 billion and $1 billion, respectively, to approximately $0.8 billion. The Company can extend up to $3.0 billion of the loans under the Bridge Credit Agreement for an additional 90-day period if desired. The 2015 Term Loan Credit Agreement is a $5.0 billion unsecured term loan facility comprising two tranches with maturities three and five years following the funding date or, if earlier, three and five years after October 27, 2016.

On August 30, 2016, the Company entered into a $1.0 billion senior unsecured term loan facility with the lender party thereto (the “2016 Term Loan Credit Agreement”, and together with the Bridge Term Loan Credit Agreement and the 2015 Term Loan Credit agreement the “Credit Agreements”) comprising two tranches with maturities on March 30, 2017 and one year after the funding date, respectively.

Walgreens Boots Alliance will be the borrower under each of the Credit Agreements. The obligations of the lenders party to each of the Credit Agreements become effective upon the date of closing of the transactions contemplated by the Merger Agreement. The ability of the Company to request the funding of loans under each Credit Agreement is subject to the satisfaction (or waiver) of certain conditions set forth therein and will terminate upon the occurrence of certain events set forth therein. Commitments to provide loans under the Credit Agreements will expire on January 27, 2017 unless mutually extended by the parties. As of November 30, 2016, there were no borrowings under any of the Credit Agreements.

Debt covenants

The Company’s credit facilities contain a covenant to maintain, as of the last day of each fiscal quarter, a ratio of consolidated debt to total capitalization not to exceed 0.60:1.00. The credit facilities contain various other customary covenants. In the case of the Bridge Credit Agreement, the 2015 Term Loan Credit Agreement and the 2016 Term Loan Credit Agreement, such covenants are not in effect until the loans under each such credit facility are funded.

Other Borrowings

The Company periodically borrows under its commercial paper program. There were no commercial paper borrowings outstanding as of November 30, 2016 or August 31, 2016, respectively. The Company had no activity under its commercial paper program for the three months ended November 30, 2016. The Company had average daily short-term borrowings of $14 million of commercial paper outstanding at a weighted average interest rate of 0.66% for the twelve month period ended August 31, 2016.