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)



	August 31, 2017		August 31, 2016
Short-term borrowings ¹
Unsecured pound sterling variable rate term loan due 2019	$	—	$	63
Other ²	251		260
Total short-term borrowings	$	251	$	323



Long-term debt ¹
Unsecured pound sterling variable rate term loan due 2019	$	—	$	1,833
$6 billion note issuance ^3,4
1.750% unsecured notes due 2018	—		1,246
2.600% unsecured notes due 2021	—		1,493
3.100% unsecured notes due 2023	—		744
3.450% unsecured notes due 2026	1,887		1,885
4.650% unsecured notes due 2046	590		590
$8 billion note issuance ^3,4
1.750% unsecured notes due 2017	—		746
2.700% unsecured notes due 2019	1,246		1,244
3.300% unsecured notes due 2021	1,244		1,242
3.800% unsecured notes due 2024	1,988		1,987
4.500% unsecured notes due 2034	495		494
4.800% unsecured notes due 2044	1,492		1,492
£700 million note issuance ^3,4
2.875% unsecured pound sterling notes due 2020	513		521
3.600% unsecured pound sterling notes due 2025	384		391
€750 million note issuance ^3,4
2.125% unsecured Euro notes due 2026	884		830
$4 billion note issuance ^4,7
3.100% unsecured notes due 2022	1,195		1,194
4.400% unsecured notes due 2042	492		492
$1 billion note issuance ^4,7
5.250% unsecured notes due 2019 ⁵	250		249
Other ⁶	24		32
Total long-term debt, less current portion	$	12,684	$	18,705


¹	Carry values 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 August 31, 2017 and 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 currencies.


³	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.

⁴

The fair value of the $6 billion, $8 billion, £0.7 billion, €0.75 billion, $4 billion and $1 billion note issuances as of August 31, 2017 was $2.5 billion, $6.8 billion, $1.0 billion, $0.9 billion, $1.7 billion and $0.3 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 August 31, 2017 spot rate, as applicable.


⁵	Includes interest rate swap fair market value adjustments. See note 10, fair value measurements for additional fair value disclosures.


⁶	Other long-term debt represents a mix of fixed and variable rate borrowings in various currencies with various maturities.

⁷

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.

At August 31, 2017, the future maturities of short-term borrowing and long-term debt, excluding debt discounts and issuance costs and financing and capital lease obligations (see note 4, leases, for the future lease obligation maturities), consisted of the following ($ in millions):



Year ended August 31,	Amount
2018	$	254
2019	283
2020	1,250
2021	515
2022	1,250
Later	9,475
Total estimated future maturities	$	13,027

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

In connection with the Merger Agreement, on December 18, 2015, the Company entered into a 364-day unsecured bridge term loan facility with initial aggregate commitments of $7.8 billion (as amended, the “Bridge Credit Agreement”) and a $5.0 billion unsecured term loan facility (as amended, the “2015 Term Loan Credit Agreement”) and on August 30, 2016, the Company entered into a $1.0 billion senior unsecured term loan facility (the “2016 Term Loan Credit Agreement”). On January 27, 2017, each of the Bridge Credit Agreement, the 2015 Term Loan Credit Agreement, and the 2016 Term Loan Credit Agreement terminated in accordance with its terms.

$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. Because the merger with Rite Aid was not consummated on or prior to June 1, 2017, the 2018 notes, the 2021 notes and the 2023 notes were redeemed on June 5, 2017 under the special mandatory redemption terms of the indenture governing such notes. Walgreens Boots Alliance was required to redeem all of the 2018 notes, the 2021 notes and the 2023 notes then outstanding, at a special mandatory redemption price equal to 101% of the aggregate principal amount of such notes, plus accrued and unpaid interest of approximately $1 million to, but excluding, the date of redemption. The 2026 notes and 2046 notes remain outstanding in accordance with their respective terms and are subject to redemption in certain circumstances.

Backstop Commitment Letter, Backstop Credit Agreement and 2017 Term Loan Credit Agreements

In connection with Amendment No. 1 to the Merger Agreement, on January 31, 2017, the Company entered into (i) a $5.0 billion backstop facility commitment letter (the “Backstop Commitment Letter”) and (ii) a $5.0 billion unsecured bridge term loan facility (the “Backstop Credit Agreement”). Upon entry into the Backstop Credit Agreement, the Backstop Commitment Letter and the commitments contemplated thereby terminated. On February 22, 2017, the Company entered into (a) a $4.8 billion unsecured term loan facility with the lenders party thereto (the “Syndicated Credit Agreement”) and (b) a $1.0 billion unsecured term loan facility with Sumitomo Mitsui Banking Corporation (the “Sumitomo Credit Agreement” and, together with the Syndicated Credit Agreement, the “February 2017 Term Loan Credit Agreements”). Upon entry into the February 2017 Term Loan Credit Agreements, the commitments available under the Backstop Credit Agreement were reduced to zero and such agreement terminated in accordance with its terms. Each of the February 2017 Term Loan Credit Agreements and the commitments contemplated thereby terminated on June 28, 2017 upon the termination of the Merger Agreement.

February 2017 Revolving Credit Agreement

On February 1, 2017, the Company entered into a $1.0 billion revolving credit facility (as amended, the “February 2017 Revolving Credit Agreement”) with the lenders from time to time party thereto and, on August 1, 2017, the Company entered into an amendment agreement thereto. The terms and conditions of the February 2017 Revolving Credit Agreement were unchanged by the amendment other than the extension of the facility termination date to the earlier of (a) January 31, 2019 and (b) the date of termination in whole of the aggregate commitments provided by the lenders thereunder. As of August 31, 2017, there were no borrowings under the February 2017 Revolving Credit Agreement.

August 2017 Credit Agreements

On August 24, 2017, the Company entered into a $1.0 billion revolving credit agreement (the “August 2017 Revolving Credit Agreement”) with the lenders from time to time party thereto and a $1.0 billion term loan credit agreement (the “2017 Term Loan Credit Agreement” and together with the August 2017 Revolving Credit Agreement, the “August 2017 Credit Agreements”) with Sumitomo Mitsui Banking Corporation.

The August 2017 Revolving Credit Agreement is an unsecured revolving credit facility with a facility termination date of the earlier of (a) January 31, 2019, subject to any extension thereof pursuant to the terms of the August 2017 Revolving Credit Agreement and (b) the date of termination in whole of the aggregate commitments provided by the lenders thereunder. The 2017 Term Loan Credit Agreement is an unsecured “multi-draw” term loan facility maturing on March 30, 2019. The aggregate commitments of Sumitomo Mitsui Banking Corporation under the 2017 Term Loan Credit Agreement are initially equal to $1.0 billion, which shall be reduced on June 1, 2018 to the lesser of $500 million and the aggregate remaining undrawn commitments thereunder. Any remaining undrawn commitments thereunder and the ability of the Company to request loans under such commitments shall terminate on September 1, 2018. As of August 31, 2017, there were no borrowings under either of the August 2017 Credit Agreements.

Repayment of notes

On May 18, 2016, the Company repaid $750 million floating rate notes due 2016 on their maturity date and on August 28, 2017, the Company redeemed, at its option, $750 million 1.750% notes due 2017. The floating rate notes due 2016 and the 1.750% notes due 2017 were issued in a public offering on November 18, 2014.

Repayment of term loan

On August 30, 2017, Walgreens Boots Alliance used available cash to repay in full all outstanding loans and obligations under a term loan credit agreement entered into by Walgreens Boots Alliance and Walgreens on November 10, 2014, which, as of the date of repayment, consisted of the remaining unamortized amount of £1.41 billion ($1.83 billion at the August 31, 2017 spot rate of $1.295 to £1) aggregate principal amount of outstanding loans together with accrued interest thereon through, but excluding, the payment date, and such other amounts required to be paid by Walgreens Boots Alliance thereunder and the 2014 Term Loan Agreement terminated in accordance with its terms.

Debt covenants

Each of 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 2017 Term Loan Credit Agreement, such covenants are only effective after the date of initial funding.

Other borrowings

The Company periodically borrows under its commercial paper program and may borrow under it in future periods. There were no commercial paper borrowings outstanding as of August 31, 2017 or 2016. The Company did not issue any commercial paper under its commercial paper program in fiscal 2017. The Company had average daily short-term borrowings of $14 million of commercial paper outstanding at a weighted average interest rate of 0.66% in fiscal 2016.

Interest

Interest paid, which is net of capitalized interest, was $643 million in fiscal 2017, $580 million in fiscal 2016 and $472 million in fiscal 2015. Interest capitalized during fiscal 2017, 2016 and 2015 was immaterial.