Subsequent Events

12 Months Ended

Dec. 31, 2019

Bayer Animal Health acquisition financing

Equity offerings

On January 22, 2020, we entered into an underwriting agreement in which we agreed to sell approximately 22.7 million shares of our common stock at a public offering price of $32.00 per share. In connection with the offering, we granted the underwriters an option to purchase up to an additional 2.3 million shares, which was exercised in full on January 23, 2020. As a result, we issued and sold a total of approximately 25.0 million shares of our common stock. Total cash of $769.9 million was received upon closing on January 27, 2020.

In addition, on January 22, 2020, we issued $550 million in tangible equity units (TEUs). We offered 11 million 5.00% TEUs at the stated amount of $50 per unit, composed of a prepaid stock purchase contract and a senior amortizing note due February 1, 2023 (the mandatory settlement date). Total cash of $530.1 million was received upon closing on January 27, 2020, which was comprised of $453.8 million of prepaid stock purchase contracts and $76.3 million of senior amortizing notes, net of debt issuance costs. Unless the stock purchase contracts are redeemed by us or settled earlier at the unit holder’s option, they are mandatorily convertible into shares of our common stock at a minimum of 1.3021 shares per purchase contract or a maximum of 1.5625 shares per purchase contract on the mandatory settlement date. This corresponds to a minimum of 14.3 million shares and a maximum of 17.2 million shares.

Debt activity

On January 31, 2020, we used a portion of the proceeds from the common stock and TEU issuances to repay indebtedness outstanding under our existing term loan facility. We paid $372.4 million in cash, composed of $371.4 million of principal and $1.0 million of accrued interest, resulting in a debt extinguishment loss of $0.8 million, primarily related to the write-off of deferred debt issuance costs.

On February 4, 2020, we successfully priced our senior secured credit facilities, consisting of the following:

•Term loan B facility with an aggregate principal amount of $4,275.0 million and a maturity of seven years.

•Revolving loan facility providing up to $750.0 million and a maturity of five years.

The term loan B facility was priced at par at LIBOR plus 175 basis points, and the revolving loan facility is expected to bear interest at LIBOR plus an applicable margin ranging between 1.50% and 2.25% per annum based on our corporate family rating or corporate credit rating.

We intend to use the proceeds from the equity and debt activities to finance the cash portion of the pending acquisition of Bayer's animal health business and to pay related fees and expenses. As a result, we have obtained substantially all of the financing necessary to consummate the acquisition and do not currently intend to pursue any additional financing previously provided under the commitment letter obtained in August 2019 (see Note 16: Commitments and Contingencies).

Divestitures

Osurnia and Capstar

In January 2020, we signed agreements to divest the worldwide rights to Osurnia and the U.S. rights to Capstar for an aggregate of $230 million in all cash deals, with the intent to advance our efforts to secure the necessary regulatory clearances for the pending acquisition of the Bayer animal health business. The closing of these transactions is contingent on us entering into consent decrees with certain agencies in connection with the pending acquisition as well as customary closing conditions. Both divestitures are expected to close by the end of 2020.

The related assets met the assets held for sale criteria as of December 31, 2019. No adjustment was required to record the assets at the lower of their carrying amounts or fair values less costs to sell on the consolidated balance sheet. Assets and liabilities considered held for sale in connection with the divestitures as of December 31, 2019 were included in the respective line items in the consolidated balance sheet as follows:


Inventories	$	10.6
Other intangibles, net	61.2
Property and equipment, net	0.2
Total assets held for sale	72.0

Deferred taxes	(1.4)
Total liabilities held for sale	$	(1.4)

Other intangibles, net classified as held for sale primarily consist of marketed products. We determined that the disposal of these net assets does not qualify for reporting as a discontinued operation because it does not represent a strategic shift that has or will have a major effect on our operations and financial results.

Vecoxan

In February 2020, we signed an agreement to divest the worldwide rights to Vecoxan for $55 million in an all cash deal, with the intent to advance our efforts to secure the necessary regulatory clearances for the pending acquisition of the Bayer animal health business. The closing of this transaction is contingent on us entering into consent decrees with certain agencies in connection with the pending acquisition as well as customary closing conditions. This divestiture is expected to close by the end of 2020.