Borrowings and Capital Lease Obligations



	December 31,		December 31,
(In millions)	2016		2015
Short-term borrowings:
Borrowings under the Revolving Credit Facilities Agreement (the “RCF”)	$	450.0	$	750.0
Borrowings under the November 2015 Facilities Agreement	2,594.8		—
Borrowings under the January 2015 Facilities Agreement	—		750.0
Other borrowings and capital lease obligations (short term portion)	23.2		12.7
	3,068.0		1,512.7
Long-term borrowings:
Senior Notes	12,039.2		—
Baxalta Notes	5,063.6		—
Borrowings under the November 2015 Facilities Agreement	2,391.8		—
Capital lease obligations (long term portion)	347.2		12.2
Other borrowings	58.0		69.9
	$	19,899.8	$	82.1

	$	22,967.8	$	1,594.8

The future payments related to short and long term borrowings and capital lease obligations, on maturities, as of December 31, 2016 are as follows:



(In millions)
2017	$	3,072.6
2018	3,217.2
2019	3,341.3
2020	1,035.3
2021	3,320.5
Thereafter	9,116.1
Total obligations	23,103.0
Less: Deferred financing costs	(135.2		)
Total debt obligations	$	22,967.8

Senior Notes Issuance

On September 23, 2016, Shire Acquisitions Investments Ireland Designated Activity Company ("SAIIDAC"), a wholly owned subsidiary of Shire Plc, issued senior notes with a total aggregate principal value of $12.1 billion (“SAIIDAC Notes”), guaranteed by Shire plc and, as of December 1, 2016, by Baxalta. SAIIDAC used the net proceeds to fully repay amounts outstanding under the January 2016 Facilities Agreement (discussed below), which was used to finance the cash consideration payable related to the Company’s acquisition of Baxalta. Below is a summary of the SAIIDAC Notes as of December 31, 2016:



(In millions, except %)	Aggregate amount		Coupon rate		Effective interest rate		Carrying amount
Fixed-rate notes due 2019	$	3,300.0	1.900	%	2.05	%	$	3,287.5
Fixed-rate notes due 2021	3,300.0		2.400	%	2.53	%	3,283.0
Fixed-rate notes due 2023	2,500.0		2.875	%	2.97	%	2,487.9
Fixed-rate notes due 2026	3,000.0		3.200	%	3.30	%	2,980.8
	$	12,100.0					$	12,039.2

The SAIIDAC Notes are senior unsecured obligations and may be redeemed at SAIIDAC's option at the greater of (1) 100% of the principal amount plus accrued and unpaid interest or (2) the sum of the present values of the remaining scheduled payments of interest and principal discounted to the date of redemption on a semi-annual basis at the applicable treasury rate (as defined) plus an incremental margin, plus, in either case, accrued and unpaid interest. The SAIIDAC Notes also contain a change of control provision that may require that SAIIDAC to offer to purchase the SAIIDAC Notes at a price equal to 101% of the principal amount plus accrued and unpaid interest to the date of purchase under certain circumstances. On December 1, 2016, Baxalta Inc., a wholly owned subsidiary of Shire Plc, fully and unconditionally guaranteed the SAIIDAC Notes.

The costs and discount associated with this offering of $60.8 million have been recorded as a reduction to the carrying amount of the debt on the Consolidated Balance Sheets. These costs will be amortized as additional interest expense using the effective interest rate method over the period from issuance through maturity. Interest on the SAIIDAC Notes is payable March 23 and September 23 of each year, beginning on March 23, 2017.

Baxalta Notes

Shire plc guaranteed senior notes issued by Baxalta with a total aggregate principal amount of $5.0 billion in connection with the Baxalta acquisition (“Baxalta Notes”). Below is a summary of the Baxalta Notes as of December 31, 2016:



(In millions, except %)	Aggregate principal		Coupon rate		Effective interest rate		Carrying amount
Variable-rate notes due 2018	$	375.0	LIBOR plus 0.780%		2.20	%	$	371.6
Fixed-rate notes due 2018	375.0		2.000	%	2.00	%	374.8
Fixed-rate notes due 2020	1,000.0		2.875	%	2.80	%	1,004.3
Fixed-rate notes due 2022	500.0		3.600	%	3.30	%	508.4
Fixed-rate notes due 2025	1,750.0		4.000	%	3.90	%	1,772.8
Fixed-rate notes due 2045	1,000.0		5.250	%	5.10	%	1,031.7
Total Baxalta Notes	$	5,000.0					$	5,063.6

The effective interest rates above exclude the effect of any related interest rate swaps. The book values above include any premiums and adjustments related to hedging instruments. For a more detailed description related to the interest rate derivative contracts, refer to Note 15, Financial Instruments, to the Consolidated Financial Statements set forth in this Annual Report on Form 10-K.

Revolving Credit Facilities Agreement

On December 12, 2014, Shire entered into a $2,100.0 million revolving credit facilities agreement (the “RCF”) with a number of financial institutions. Shire is an original borrower and original guarantor under the RCF. On January 15, 2016, SAIIDAC became an additional guarantor under the RCF and on December 1, 2016, Baxalta became an additional guarantor under the RCF. Shire has agreed to act as guarantor for any of its subsidiaries that become additional borrowers under the RCF. As of December 31, 2016, the Company utilized $450.0 million of the RCF.

The RCF, which terminates on December 12, 2021, may be applied towards financing the general corporate purposes of Shire. The RCF incorporates a $250.0 million U.S. dollar and Euro swingline facility operating as a sub-limit thereof.

Interest on any loans made under the RCF is payable on the last day of each interest period, which may be one week or one, two, three or six months at the election of Shire, or as otherwise agreed with the lenders. The interest rate for the RCF is: LIBOR (or, in relation to any revolving loan in Euro, EURIBOR); plus 0.30% per annum subject to change depending upon (i) the prevailing ratio of Net Debt to EBITDA (each as defined in the RCF) in respect of the most recently completed financial year or financial half year and (ii) the occurrence and continuation of an event of default in respect of the financial covenants or the failure to provide a compliance certificate.

Shire shall also pay (i) a commitment fee equal to 35% of the applicable margin on available commitments under the RCF for the availability period applicable thereto and (ii) a utilization fee equal to (a) 0.10% per year of the aggregate of all outstanding loans up to an aggregate base currency amount equal to $700.0 million, (b) 0.15% per year of the amount by which the aggregate base currency amount of all outstanding loans exceeds $700.0 million but is equal to or less than $1,400.0 million and (c) 0.30% per year of the amount by which the aggregate base currency amount of all outstanding loans exceeds $1,400.0 million.

The RCF includes customary representations and warranties, covenants and events of default, including requirements that Shire’s (i) ratio of Net Debt to EBITDA in respect of the most recently-ended 12-month relevant period (each as defined in the RCF) must not, at any time, exceed 3.5:1 except that, following an acquisition fulfilling certain criteria, Shire may elect to increase this ratio to (a) 5.5:1 for the relevant period in which the acquisition was completed (b) 5.0:1 in respect of the first relevant period following the relevant period in which the acquisition was completed and (c) 4.5:1 in respect of the second relevant period following the relevant period in which the acquisition was completed and (ii) ratio of EBITDA to Net Interest for the most recently-ended 12-month relevant period (each as defined in the RCF) must not be less than 4.0:1. Shire elected to increase the Net Debt to EBITDA ratio in connection with the period ending June 30, 2016, following the completion of the acquisition of Baxalta during the period. Consequently, the applicable ratio for the period ending December 31, 2016 is 5.0:1.

The RCF restricts, subject to certain exceptions, Shire’s ability to incur additional financial indebtedness, grant security over its assets or provide loans/grant credit. Further, any lender may require mandatory prepayment of its participation if there is a change of control of Shire, subject to certain exceptions for schemes of arrangement and analogous schemes.

Events of default under the RCF include, subject to customary grace periods and materiality thresholds: (i) non-payment of any amounts due under the finance documents (as defined in the RCF), (ii) failure to satisfy any financial covenants, (iii) material misrepresentation in any of the finance documents, (iv) failure to pay, or certain other defaults, under other financial indebtedness, (v) certain insolvency events or proceedings, (vi) material adverse changes in the business, operations, assets or financial condition of Shire as a whole, (vii) if it becomes unlawful for Shire (or any successor parent company) or any of their respective subsidiaries that are parties to the RCF to perform their obligations thereunder or (viii) if Shire (or any successor parent company) or any subsidiary thereof which is a party to the RCF repudiates such agreement or other finance document, among others.

Term Loan Facilities Agreement

January 2016 Facilities Agreement

On January 11, 2016, Shire (as original guarantor and original borrower), entered into an $18.0 billion bridge facilities agreement with various financial institutions (the “January 2016 Facilities Agreement”). The January 2016 Facilities Agreement comprised two credit facilities: (i) a $13.0 billion term loan facility originally maturing on January 11, 2017 ("January 2016 Facility A") and (ii) a $5.0 billion revolving loan facility originally maturing on January 11, 2017 ("January 2016 Facility B"). On April 1, 2016, SAIIDAC became an additional borrower and additional guarantor under the January 2016 Facilities Agreement.

The January 2016 Facility A was utilized to finance the cash consideration payable in respect of the acquisition of Baxalta on June 3, 2016 in the amount of $12,390.0 million. The net proceeds from the issuance of the SAIIDAC Notes were used to fully repay the amounts outstanding under the January 2016 Facility A in September 2016. The January 2016 Facility B was canceled effective July 11, 2016, in accordance with its terms.

November 2015 Facilities Agreement

On November 2, 2015, Shire (as original guarantor and original borrower) entered into a $5.6 billion facilities agreement with various financial institutions (the “November 2015 Facilities Agreement”). The November 2015 Facilities Agreement comprises three credit facilities: (i) a $1.0 billion term loan facility of which, following the exercise of the one year extension option in the amount of $400.0 million, $600.0 million matured and was repaid on November 2, 2016 and $400.0 million matures on November 2, 2017 (“November 2015 Facility A”), (ii) a $2.2 billion amortizing term loan facility which matures on November 2, 2017 (“November 2015 Facility B”) and (iii) a $2.4 billion amortizing term loan facility which matures on November 2, 2018 (“November 2015 Facility C”).

On January 15, 2016, SAIIDAC became an additional borrower and an additional guarantor under the November 2015 Facilities Agreement and on December 1, 2016, Baxalta became an additional guarantor under the November 2015 Facilities Agreement. As of December 31, 2016, the November 2015 Facilities Agreement was fully utilized by SAIIDAC as borrower in the amount of $5.0 billion to finance the cash consideration payable and certain costs related to the acquisition of Dyax. On January 30, 2017, SAIIDAC made its first repayment installment of $400.0 million of November 2015 Facility B in accordance with the terms of the agreement.

Interest on any loans made under the November 2015 Facilities Agreement is payable on the last day of each interest period, which may be one week or one, two, three or six months, or as otherwise agreed with the lenders. The interest rate applicable is LIBOR plus, in the case of the November 2015 Facility A, 0.55% per annum, in the case of the November 2015 Facility B, 0.65% per annum and, in the case of the November 2015 Facility C, 0.75% per annum, in each case subject to change depending on (i) the prevailing ratio of Net Debt to EBITDA (each as defined in the November 2015 Facilities Agreement) in respect of the most recently completed financial year or financial half year and (ii) the occurrence and continuation of an event of default in respect of the financial covenants or failure to provide a compliance certificate.

The November 2015 Facilities Agreement includes customary representations and warranties, covenants and events of default, including requirements that Shire’s (i) ratio of Net Debt to EBITDA in respect of the most recently ended 12-month relevant period, (each as defined in the November 2015 Facilities Agreement), must not, at any time, exceed 3.5:1, except that following an acquisition fulfilling certain criteria, Shire may elect to increase this ratio to (a) 5.5:1 for the relevant period in which the acquisition was completed, (b) 5.0:1 in respect of the first relevant period following the relevant period in which the acquisition was completed, and (c) 4.5:1 in respect of the second relevant period following the relevant period in which the acquisition was completed, Shire has elected to increase this ratio in connection with the period ending June 30, 2016, following the completion of the acquisition of Baxalta during the period and (ii) ratio of EBITDA to Net Interest in respect of the most recently ended 12 month relevant period, (each as defined in the November 2015 Facilities Agreement), must not be less than 4.0:1.

The November 2015 Facilities Agreement restricts, subject to certain exceptions, Shire's ability to incur additional financial indebtedness, grant security over its assets or provide loans/grant credit. Further, any lender may require mandatory prepayment of its participation if there is a change of control of Shire, subject to certain exceptions for schemes of arrangement and analogous schemes.

Events of default under the November 2015 Facilities Agreement include, subject to customary grace periods and materiality thresholds: (i) non-payment of any amounts due under the finance documents (as defined in the November 2015 Facilities Agreement), (ii) failure to satisfy any financial covenants, (iii) material misrepresentation in any of the finance documents, (iv) failure to pay, or certain other defaults, under other financial indebtedness, (v) certain insolvency events or proceedings, (vi) material adverse changes in the business, operations, assets or financial condition of Shire as a whole, (vii) if it becomes unlawful for Shire (or any successor parent company) or any of their respective subsidiaries that are parties to the November 2015 Facilities Agreement to perform their obligations thereunder or (viii) if Shire (or any successor parent company) or any subsidiary thereof which is a party to the November 2015 Facilities Agreement repudiates the November 2015 Facilities Agreement or any other finance document, among others.

January 2015 Facility Agreement

On January 11, 2015, Shire entered into an $850.0 million term facility agreement with various financial institutions (the “January 2015 Facility Agreement”) with an original maturity date of January 10, 2016. The maturity date was subsequently extended to July 11, 2016 in line with the provisions within the January 2015 Facility Agreement allowing the maturity date to be extended twice, at Shire’s option, by six months on each occasion.

The January 2015 Facility Agreement was used to finance Shire’s acquisition of NPS Pharma (including certain related costs). On September 28, 2015, the Company reduced the January 2015 Facility Agreement by $100.0 million. In January 2016 and at various points thereafter, the Company canceled parts of the January 2015 Facilities Agreement. On February 22, 2016, the Company repaid the remaining balance of $100.0 million of the January 2015 Facilities Agreement in full.

Capital lease obligations

As of December 31, 2016, capital lease obligations predominantly related to the obligations assumed as part of the Baxalta acquisition. These leases are primarily related to office and manufacturing facilities. As of December 31, 2016, the total capital lease obligations, including current portions, were $353.6 million.

Short-term uncommitted lines of credit (“Credit lines”)

Shire has access to various Credit lines from a number of banks which are available to be utilized from time to time to provide short-term cash management flexibility. These Credit lines can be withdrawn by the banks at any time. The Credit lines are not relied upon for core liquidity. As of December 31, 2016, these Credit lines were not utilized.