Indebtedness

6 Months Ended

Jul. 01, 2023

Debt Disclosure [Abstract]

Indebtedness

INDEBTEDNESS

Total borrowings are summarized as follows (in millions):

			July 1, 2023		December 31, 2022
Term loans
	2022 Term loan A due April 20, 2027		484.4		493.8
	2022 Term loan B due April 20, 2029		1,089.0		1,094.5
	Total term loans		1,573.4		1,588.3
Notes and Bonds
	Coupon	Due
	3.900%	December 15, 2024	700.0		700.0
	4.375%	March 15, 2026	700.0		700.0
	4.650%	June 15, 2030(1)	750.0		750.0
	5.300%	November 15, 2043	90.5		90.5
	4.900%	December 15, 2044	303.9		303.9
	Total notes and bonds		2,544.4		2,544.4
Other financing			18.9		20.6
Unamortized discount, net			(14.5)		(15.9)
Deferred financing fees			(27.9)		(30.8)
Total borrowings outstanding			4,094.3		4,106.6
	Current indebtedness		(38.4)		(36.2)
Total long-term debt less current portion			$	4,055.9	$	4,070.4

(1) The coupon rate noted above increased from 4.400% to 4.650% on payments starting after June 15, 2023, following a credit rating downgrade by Moody's in the first quarter of 2023. Future interest rate adjustments are subject to a 2.0% total cap above the original 3.150% interest rate based on certain rating events as specified in the Note’s Supplemental Indenture No. 3, dated as of June 19, 2020, among Perrigo Finance Unlimited Company, Perrigo Company plc and Wells Fargo Bank, National Association, as trustee.

Credit Agreements

On April 20, 2022, we and our wholly owned subsidiary, Perrigo Investments, LLC, entered into new senior secured credit facilities consisting of (i) a $1.0 billion five-year revolving credit facility (the “2022 Revolver”), (ii) a $500 million five-year Term Loan A facility (the “2022 Term Loan A Facility”), and (iii) a $1.1 billion seven-year Term Loan B facility (the “2022 Term Loan B Facility” and, together with the 2022 Revolver and 2022 Term Loan A Facility, the “New Senior Secured Credit Facilities”), pursuant to a new Term Loan and Revolving Credit Agreement. The New Senior Secured Credit Facilities are guaranteed, along with any hedging or cash management obligations entered into with a lender, by us and certain of our direct and indirect wholly-owned subsidiaries organized in the United States, Ireland, Belgium and England and Wales (subject to certain exceptions) (the “Guarantor Subsidiaries”). The Guarantor Subsidiaries and Perrigo Investments, LLC provide full and unconditional guarantees, jointly and severally, on a senior unsecured basis, of the 5.300% Notes due 2043 issued by the Company, and the Guarantor Subsidiaries, Perrigo Investments, LLC and the Company provide full and unconditional guarantees, jointly and severally, on a senior unsecured basis, of the 3.900% Notes due 2024, the 4.375% Notes due 2026, the 4.650% Notes due 2030 and the 4.900% Notes due 2044 issued by Perrigo Finance Unlimited Company, a wholly-owned subsidiary.

The Credit Agreement also contains customary representations and warranties and customary affirmative and negative covenants applicable to the Borrower and its restricted subsidiaries, including, among other things, restrictions on indebtedness, liens, investments, mergers, dispositions, prepayment of junior indebtedness and dividends and other distributions. The Credit Agreement contains financial covenants that require the Borrower and its restricted subsidiaries to (a) not exceed a maximum first lien secured net leverage ratio of 3.00 to 1.00 at the end of each fiscal quarter and (b) not fall below a minimum interest coverage ratio of 3.00 to 1.00 at the end of each fiscal quarter, provided that such covenants apply only to the 2022 Revolver and the 2022 Term Loan A Facility. If we consummate certain qualifying acquisitions during the term of the loan, the maximum first lien secured net leverage ratio covenant would increase to 3.25 to 1.00 for such quarter and the three following fiscal quarters

thereafter. The Credit Agreement also contains customary events of default relating to, among other things, failure to make payments, breach of covenants and breach of representations.

During the three and six months ended July 1, 2023, principal repayments of $9.0 million and $14.9 million were made on the 2022 Term Loan A Facility and 2022 Term Loan B Facility, respectively.

There were no borrowings outstanding under the 2022 Revolver as of July 1, 2023 or December 31, 2022, respectively.

We are in compliance with all the covenants under our debt agreements as of July 1, 2023.

Other Financing

We have overdraft facilities available that we use to support our cash management operations. We report any balances outstanding under such facilities in the above table under "Other financing". There were no borrowings outstanding under the overdraft facilities as of July 1, 2023 or December 31, 2022.

We have financing leases that are reported in the above table under "Other financing" (refer to Note 7).