XML 129 R19.htm IDEA: XBRL DOCUMENT v2.4.1.9
Credit Arrangements
12 Months Ended
Dec. 31, 2014
Debt Disclosure [Abstract]  
Credit Arrangements

10. Credit Arrangements

The following is a summary of the Company’s revolving credit facilities at December 31, 2014:

 

Facility

 

Interest Rates

$400.0 million (first lien revolving credit facility)

  One month London Interbank Offer Rate (“LIBOR”), (0.17% at December 31, 2014) plus 2.50% to 2.75% depending upon the Company’s total leverage ratio

$25.0 million (receivables financing facility)

  LIBOR Market Index Rate, (0.17% at December 31, 2014) plus 0.85% to 1.35% depending upon the Company’s debt rating
£10.0 million (approximately $15.6 million) general banking facility with a European headquartered bank   Bank’s base rate (0.5% at December 31, 2014) plus 1%

During 2014, the Company borrowed and repaid $150.0 million from its first lien revolving credit facility. The Company did not have any outstanding borrowings under any of the revolving credit facilities at December 31, 2014 or 2013. At December 31, 2014, there were bank guarantees totaling approximately £4.2 million (approximately $6.5 million) issued against the availability of the general banking facility with a European headquartered bank through their operations in the United Kingdom.

 

Long-term debt consists of the following (in thousands):

 

     December 31,  
     2014     2013  

Term Loan B-3 due 2018 ((the greater of three month LIBOR or 1.25%) plus 2.50%, or 3.75% at December 31, 2014)

   $ 2,030,606      $ 2,060,756   

Receivables financing facility due 2018 ((LIBOR 0.17%) plus 1.05%, or 1.22% at December 31, 2014)

     275,000        —     

Other notes payable

     —          7   
  

 

 

   

 

 

 
     2,305,606        2,060,763   

Less: unamortized discount

     (12,379     (14,975

Less: current portion

     (750     (10,307
  

 

 

   

 

 

 
   $ 2,292,477      $ 2,035,481   
  

 

 

   

 

 

 

Contractual maturities of long-term debt at December 31, 2014 are as follows (in thousands):

 

2015

   $ 750   

2016

     20,600   

2017

     20,600   

2018

     2,263,656   
  

 

 

 
   $ 2,305,606   
  

 

 

 

The estimated fair value of the long-term debt, which is primarily based on rates in which the debt is traded among banks, was approximately $2.3 billion and $2.1 billion at December 31, 2014 and 2013, respectively.

Senior Secured Credit Agreement

On June 8, 2011, the Company, through its wholly owned subsidiary, Quintiles Transnational Corp. (“Quintiles Transnational”), entered into the initial credit agreement governing the Quintiles Transnational senior secured credit facilities under which the Company was permitted to borrow up to $2.225 billion. The credit facility arrangements were amended in October 2012, December 2012, December 2013 and November 2014, as described below, and initially consisted of two components: a $225.0 million first lien revolving credit facility due in 2016 and a $2.0 billion first lien Term Loan B due in 2018 (the “Term Loan B”).

On December 20, 2012, the Term Loan B was repaid with the proceeds of a new Term Loan B-2 (see below), together with cash on hand.

October 2012 Debt Issuance

On October 22, 2012, the Company entered into an amendment to the credit agreement to provide (i) a new Term Loan B-1 (the “Term Loan B-1”) with a syndicate of banks for an aggregate principal amount of $175.0 million due 2018, (ii) a one-year extension of the maturity date of its existing $225.0 million senior secured revolving credit facility (to 2017) and (iii) a $75.0 million increase in its existing $225.0 million senior secured revolving credit facility (the “Increased Revolving Facility”), which would also mature in 2017. Annual maturities on the Term Loan B-1 were 1% of the original principal amount until December 31, 2017, with the balance of the Term Loan B-1 to be repaid at final maturity on June 8, 2018. In the fourth quarter of 2012, the proceeds from the Term Loan B-1, together with approximately $73 million of cash on hand, were used to (i) pay a dividend to the Company’s shareholders totaling approximately $241.7 million, (ii) pay a bonus to certain option holders totaling approximately $2.4 million and (iii) pay approximately $4.0 million of fees and related expenses. Other terms and covenants of the Term Loan B-1 and the Increased Revolving Facility were and are the same as the terms and covenants of the Company’s Term Loan B and the senior secured revolving credit facility prior to the amendment.

 

In May 2013, the Company used $50.0 million of cash to pay down indebtedness under the Term Loan B-1. In connection with the pay down of indebtedness, the Company recognized a $1.0 million loss on extinguishment of debt which included approximately $930,000 of unamortized debt issuance costs and $112,000 of unamortized discount.

On December 20, 2013, the Term Loan B-1 was repaid with the proceeds of a new Term Loan B-3 (see below).

2012 Refinancing Transaction

On December 20, 2012, the Company entered into an amendment to the credit agreement to provide a new Term Loan B-2 (the “Term Loan B-2”) with a syndicate of banks for an aggregate principal amount of $1.975 billion due in 2018. Annual maturities on the Term Loan B-2 were $20.0 million through December 31, 2017 with the balance of the Term Loan B-2 to be repaid at final maturity on June 8, 2018. Other terms and covenants of the Term Loan B-2 were the same as the terms and covenants of our Term Loan B prior to the amendment.

The Company used the proceeds from the Term Loan B-2, together with cash on hand, to repay the remaining outstanding balance on the Company’s then-existing Term Loan B and related fees and expenses. In 2012, the Company recognized a $1.3 million loss on extinguishment of debt which included approximately $634,000 of unamortized debt issuance costs, approximately $631,000 of unamortized discount and approximately $10,000 of related fees and expenses.

On December 20, 2013, the Term Loan B-2 was repaid with the proceeds of a new Term Loan B-3 (see below).

2013 Refinancing Transaction

On December 20, 2013, the Company entered into an amendment to its senior secured credit agreement to provide a new Term Loan B-3 (the “Term Loan B-3”) with a syndicate of banks for an aggregate principal amount of $2.061 billion due in 2018. The proceeds from the Term Loan B-3 were used to repay the then outstanding balances of the Term Loan B-1 and Term Loan B-2 and related fees and expenses. Quarterly principal payments on the Term Loan B-3 are $5.15 million, which commenced on September 30, 2014 and continue through March 31, 2018, with the balance of the Term Loan B-3 to be repaid at final maturity on June 8, 2018. Optional prepayments of the Term Loan B-3 are applied to reduce principal payments in direct order of maturity. The credit facility arrangements are collateralized by substantially all of the assets of Quintiles Transnational and the assets of Quintiles Transnational’s domestic subsidiaries, including 100% of the equity interests of substantially all of Quintiles Transnational’s domestic subsidiaries, and 65% of the equity interests of substantially all of the first-tier foreign subsidiaries of Quintiles Transnational and its domestic subsidiaries (in each case other than certain excluded subsidiaries as defined in the credit agreement). Beginning with fiscal year ending December 31, 2014, the Company is required to apply 50% of excess cash flow (as defined in the credit agreement), subject to a reduction to 25% or 0% depending upon Quintiles Transnational’s total leverage ratio, for prepayment of the Term Loan B-3, with any such prepayment to be applied, first, in direct order of maturities, to reduce the Term Loan B-3 principal payments due within eight quarters of such prepayment, then on a pro rata basis to reduce the other principal payments due prior to the maturity date, and then to reduce the principal payments due on the maturity date. The amendment also provided additional flexibility for the Company to enter into certain securitization financing transactions such as the receivables financing facility transaction we entered into in December 2014. Other than a lower interest rate, other terms and covenants of the Term Loan B-3 are the same as the terms and covenants of our Term Loan B-1 and Term Loan B-2 prior to the amendment.

In connection with this amendment to the credit agreement, in 2013 the Company recognized a $3.3 million loss on extinguishment of debt which included approximately $1.6 million of unamortized debt issuance costs, approximately $1.6 million of unamortized discount and approximately $25,000 of related fees and expenses.

 

2014 Revolving Credit Facility Amendment

On November 7, 2014, the Company entered into an amendment to its senior secured credit agreement that increased its first lien revolving credit facility from $300.0 million to $400.0 million and extended the maturity date for most of the first lien revolving credit facility by six months. The $100.0 million increase will mature in December 2017 along with $282.5 million of the existing $300.0 million first lien revolving credit facility. In addition, the maturity date for the aggregate of $382.5 million of the first lien revolving credit facility may be further extended to June 2019 without lender consent in connection with certain extensions of the maturity date of the Term Loan B-3 under the senior secured credit facilities. The maturity date for the remaining $17.5 million of the existing $300.0 million first lien revolving credit facility was not altered and continues to be June 2017. The other terms of the senior secured credit agreement were not altered by the amendment.

Receivables Financing Facility

On December 5, 2014, the Company entered into a four-year arrangement to securitize certain of its accounts receivable. Under the receivables financing facility, certain of the Company’s accounts receivable are sold on a non-recourse basis by certain of its consolidated subsidiaries to another of its consolidated subsidiaries, a bankruptcy-remote special purpose entity (“SPE”). The SPE obtained a term loan and revolving loan commitment from a third party lender, secured by liens on the assets of the SPE, to finance the purchase of the accounts receivable, which included a $275.0 million term loan and a $25.0 million revolving loan commitment. The revolving loan commitment may be increased by an additional $35.0 million as amounts are repaid under the term loan. Quintiles Transnational has guaranteed the performance of the obligations of existing and future subsidiaries that sell and service the accounts receivable under the receivables financing facility. The assets of the SPE are not available to satisfy any of the Company’s obligations or any obligations of its subsidiaries. As of December 31, 2014, $25.0 million of revolving loans were available under the receivables financing facility.

The Company used the proceeds from the term loan under the receivables financing facility to repay in full the amount outstanding on the revolving credit facility under its senior secured credit agreement ($150.0 million), to repay $25.0 million of the Term Loan B-3 under its senior secured credit agreement, to pay related fees and expenses and the remainder was used for general working capital purposes.

Other Long-Term Debt

In February 2012, the Company executed a new term loan facility with a syndicate of banks for an aggregate principal amount of $300.0 million due February 26, 2017 (the “Holdings Term Loan”). The Company used the proceeds from the Holdings Term Loan, together with cash on hand, to (1) pay a dividend to its shareholders in March 2012 totaling approximately $326.1 million, (2) pay a bonus to certain option holders totaling approximately $8.9 million and (3) pay related expenses.

In May 2013, the Company used $308.9 million of cash to pay all amounts outstanding under the $300.0 million Holdings Term Loan (including accrued interest and related fees and expenses). In connection with the repayment of debt, the Company recognized a $15.5 million loss on extinguishment of debt which included approximately $4.7 million of unamortized debt issuance costs, $4.7 million of unamortized discount and $6.1 million of related fees and expenses.

Debt Issuance Costs and Covenants

In connection with the long-term debt agreements, the Company had net debt issuance costs of approximately $10.2 million and $12.6 million as of December 31, 2014 and 2013, respectively, included in deposits and other assets in the accompanying consolidated balance sheets. The debt issuance costs are being amortized as a component of interest expense using the effective interest method over the term of the related debt arrangements, which range from five years to seven years.

 

The Company’s long-term debt agreements contain usual and customary restrictive covenants that, among other things, place limitations on its ability to declare dividends and make other restricted payments; prepay, redeem or purchase debt; incur liens; make loans and investments; incur additional indebtedness; amend or otherwise alter debt and other material documents; engage in mergers, acquisitions and asset sales; transact with affiliates; and engage in businesses that are not related to the Company’s existing business. In 2014, 2013 and 2012, the Company was in compliance with its debt covenants.