Debt

The Receivables Facility

In February 2012, MPI entered into a $300 million accounts receivable securitization facility, which was expanded to $400 million in July 2012, pursuant to (i) a Purchase and Contribution Agreement, between MPI and Mylan Securitization, and (ii) a Receivables Purchase Agreement, among Mylan Securitization, as seller, MPI, as originator and servicer, certain conduit purchasers, committed purchasers and letter of credit issuers from time to time party thereto (collectively, the “Purchasers”), certain purchaser agents from time to time party thereto and The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch, as agent (the “Agent”). The Company agreed to enter into a performance guarantee with respect to the obligations of MPI under these agreements.

Under the Purchase and Contribution Agreement, MPI will sell, on an ongoing basis, certain accounts receivable and the right to the collections on those accounts receivable to Mylan Securitization. Once sold to Mylan Securitization, the accounts receivable and rights to collection described above will be separate and distinct from MPI’s own assets and will not be available to MPI’s creditors should MPI become insolvent. The servicing, administration and collection of the accounts receivable will be conducted by MPI, as servicer. Under the terms of the Receivables Purchase Agreement, Mylan Securitization may, from time to time, obtain up to $400 million (in the form of cash or letters of credit for the benefit of MPI) from the Purchasers through the sale of its interest in such receivables and collections. The size of the accounts receivable securitization facility may be increased from time to time, upon request by Mylan Securitization and with the consent of the purchaser agents and the Agent, up to a maximum of $500 million. Purchases under the Receivables Purchase Agreement will be repaid as accounts receivable are collected, with new purchases being advanced as new accounts receivable are originated by MPI and sold to Mylan Securitization, with settlement occurring monthly. Mylan Securitization has the option to reduce the commitments under the Receivables Purchase Agreement. Mylan Securitization’s assets have been pledged to the Agent in support of its obligations under the Receivables Purchase Agreement. Any amounts outstanding under the facility will be recorded as a secured loan and the receivables underlying any borrowings will continue to be included in accounts receivable, net, in the Condensed Consolidated Balance Sheets of the Company. The accounts receivable securitization facility has a term of three years.

The Receivables Purchase Agreement contains various customary affirmative and negative covenants and also contains customary default and termination provisions, which provide for acceleration of amounts owed under the Receivables Purchase Agreement upon the occurrence of certain specified events, including, but not limited to, failure by Mylan Securitization to pay interest and other amounts due, defaults on certain indebtedness, certain judgments, change in control, certain events negatively affecting the overall credit quality of transferred accounts receivable, bankruptcy and insolvency events.

As of September 30, 2012, the Condensed Consolidated Balance Sheets include $562.9 million of accounts receivable balances legally sold to Mylan Securitization, as well as $300 million of short-term borrowings. The interest rate on borrowings under this facility was approximately 1.01% at September 30, 2012.

Mylan Securitization holds trade accounts receivable whose cash flows are the primary source of repayment for its liabilities. Investors only have recourse to the assets held by Mylan Securitization. The Company is involved in these arrangements to the extent that it originates the accounts receivable and provides servicing activities.

Long-Term Debt

A summary of long-term debt is as follows:



(In thousands)	September 30, 2012		December 31, 2011
U.S. Term Loans	$	1,179,688	$	1,250,000
Revolving Facility	340,000		—
Cash Convertible Notes	1,019,108		937,160
Senior Convertible Notes	—		593,983
2017 Senior Notes	550,000		550,000
2018 Senior Notes	836,657		818,774
2020 Senior Notes	1,013,697		1,014,643
Other	2,614		3,666
	4,941,764		5,168,226
Less: Current portion	95,169		689,146
Total long-term debt	$	4,846,595	$	4,479,080

Senior Credit Facilities

In November 2011, the Company entered into a Senior Credit Agreement with a syndication of banks, which provided $1.25 billion in U.S. Term Loans (the “U.S. Term Loans”) and contains a $1.25 billion revolving facility (the “Revolving Facility,” and together with the U.S. Term Loans, the “Senior Credit Facilities”). Amortization payments due in the first, second and third quarters of 2012 under the Senior Credit Agreement on the U.S. Term Loans were paid in March 2012, June 2012 and September 2012, in the amount of $23.4 million for each quarter. At September 30, 2012, the Company had $340 million outstanding under the Revolving Facility. The interest rate on the Revolving Facility at September 30, 2012 was 1.82%.

Cash Convertible Notes

At September 30, 2012, the $1.02 billion outstanding consists of $494.3 million of Cash Convertible Notes debt ($575 million face amount, net of $80.7 million discount) and the bifurcated conversion feature with a fair value of $524.8 million recorded as a liability within long-term debt in the Condensed Consolidated Balance Sheets at September 30, 2012. The Cash Convertible Notes will mature on September 15, 2015, subject to earlier repurchase or conversion. Holders may convert their notes subject to certain conversion provisions determined by the market price of the Company’s common stock, specified distributions to common shareholders, a fundamental change, and certain time periods specified in the purchase agreement. Additionally, the Company has purchased call options, which are recorded as assets at their fair value of $524.8 million within other assets in the Condensed Consolidated Balance Sheets at September 30, 2012. At December 31, 2011, the $937.2 million outstanding consists of $477.2 million of debt ($575 million face amount, net of $97.8 million discount) and the bifurcated conversion feature with a fair value of $460 million recorded as a liability within other long-term obligations in the Condensed Consolidated Balance Sheets. The purchased call options are assets recorded at their fair value of $460 million within other assets in the Condensed Consolidated Balance Sheets at December 31, 2011.

As of September 30, 2012, because the closing price of Mylan’s common stock for at least 20 trading days in the period of 30 consecutive trading days ending on the last trading day in the September 30, 2012 period, was more than 130% of the applicable conversion reference price of $13.32 at September 30, 2012, the $575 million of Cash Convertible Notes are currently convertible. Although the Company’s experience is that convertible debentures are not normally converted by investors until close to their maturity date, it is possible that debentures could be converted prior to their maturity date if, for example, a holder perceives the market for the debentures to be weaker than the market for the common stock. Upon an investor’s election to convert, the Company is required to pay the full conversion value in cash. Should holders elect to convert, the Company intends to draw on its revolving credit facility to fund any principal payments. The amount payable per $1,000 notional bond would be calculated as the product of (1) the conversion reference rate (currently 75.0751) and (2) the average Daily Volume Weighted Average Price per share of common stock for a specified period following the conversion date. Any payment above the principal amount is matched by a convertible note hedge.

Senior Convertible Notes

In March 2012, $600 million of Senior Convertible Notes was repaid at maturity. At December 31, 2011, the $594 million of debt is net of a $6.0 million discount.

Senior Notes

The Company has entered into interest rate swaps that convert $500 million of 2018 Senior Notes principal debt to a variable rate. The variable rate was 3.39% at September 30, 2012. At September 30, 2012, the $836.7 million of 2018 Senior Notes debt is net of a $10.0 million discount and includes a fair value adjustment of $46.7 million associated with the interest rate swaps. At December 31, 2011, the $818.8 million of debt is net of an $11.0 million discount and includes a fair value adjustment of $29.8 million.

At September 30, 2012, the $1.01 billion of 2020 Senior Notes debt includes a $13.7 million premium. At December 31, 2011, the $1.01 billion of debt includes a $14.6 million premium.

Details of the interest rates in effect at September 30, 2012 and December 31, 2011 on the outstanding borrowings under the U.S. Term Loans are in the table below:



	September 30, 2012
	Outstanding		Basis	Rate
	(In thousands)
U.S. Term Loans:
Swapped to Fixed Rate — January 2014 ⁽¹⁾	$	500,000	Fixed	2.60	%
Swapped to Fixed Rate — March 2014 ⁽¹⁾	350,000		Fixed	2.45	%
Floating Rate	329,688		LIBOR + 2.00%	2.22	%
Total U.S. Term Loans	$	1,179,688



	December 31, 2011
	Outstanding		Basis	Rate
	(In thousands)
U.S. Term Loans	$	1,250,000	LIBOR + 2.00%	2.34	%

____________

⁽¹⁾

Effective January 2012, $500 million of the U.S. Term Loans have been swapped to a fixed rate of 0.60% plus the specified spread under the Senior Credit Agreement, through January 2014. Effective March 2012, an additional $350 million of the U.S. Term Loans have been swapped to a fixed rate of 0.45% plus the specified spread under the Senior Credit Agreement, through March 2014. Effective June 2012, $750 million of the currently effective swaps have been extended to maturities ranging from March 2016 to November 2016, thereby fixing a rate of 0.91% plus the specified spread on the underlying U.S. Term Loans, for the extension period. As of September 30, 2012, the specified spread under the Senior Credit Agreement was 200 basis points. These swaps have been designated as cash flow hedges of the variability in interest expense related to our variable rate debt.

At September 30, 2012, the fair value of the Senior Notes was approximately $2.60 billion, and at December 31, 2011, the fair value of the Senior Notes and Senior Convertible Notes was approximately $3.15 billion. At September 30, 2012 and December 31, 2011, the fair value of the Cash Convertible Notes was approximately $1.10 billion and $1.00 billion, respectively. The fair values of the Senior Notes and Cash Convertible Notes were valued at quoted market prices from broker or dealer quotations and were classified as Level 2 in the fair value hierarchy.

Mandatory minimum repayments remaining on the outstanding borrowings under the term loans and notes at September 30, 2012, at notional amounts, are as follows for each of the periods ending December 31:



(In thousands)	U.S. Term Loans		Cash Convertible Notes		2017 Senior Notes		2018 Senior Notes		2020 Senior Notes		Revolving Facility		Total
2012	$	23,438	$	—	$	—	$	—	$	—	$	—	$	23,438
2013	93,750		—		—		—		—		—		93,750
2014	125,000		—		—		—		—		—		125,000
2015	187,500		575,000		—		—		—		—		762,500
2016	750,000		—		—		—		—		340,000		1,090,000
Thereafter	—		—		550,000		800,000		1,000,000		—		2,350,000
Total	$	1,179,688	$	575,000	$	550,000	$	800,000	$	1,000,000	$	340,000	$	4,444,688