Wednesday 9 July 2014

Something afoot with Boots - part 2

It appears I might have kicked hornet's nest with this Alliance Boots piece I published a couple of days ago.

Indeed, people close to the situation have been in touch and they weren't best pleased with what I wrote. Here is a link to the original article I published earlier in the week:

To be honest, I was a bit surprised with the reaction from these people as I didn't think I had written anything particularly earth shattering or factually inaccurate.

As I said at the beginning of the piece, I was in two minds about publishing an article as I didn't think I had much in terms of "new" news in the first place and was using historical information from previous articles to contextualise the little I had.

Still, people familiar with the situation are a bit peeved and so I am happy to make some clarifications on their behalf to set the record straight.

To start with, the people close to situation would like to point out that the company's net borrowings currently stand at just over £5 billion (rather than the £7 billion to £8 billion for the year ending 2011 - 2012 that I suggested in my original piece) at the end of 2013 - 2014.

And the £5 billion of debt that was due to mature in 2015 should now be due in 2016 and 2017. This is because the maturity deadline was extended when Walgreen bought its Alliance Boots stake in 2012.

I suppose one of the things I was trying to allude to in my previous piece was: what happens to Alliance Boots's massive debt pile (£5 billion is still a lot of debt) once Walgreen does decide to go ahead and purchase the remainder of the company it doesn't own? I mean, wouldn't a change of control from KKR to Walgreen require some kind of refinancing of the £5 billion debt pile and wouldn't this be a bit tricky to do on the same terms as previously?

Well, people close to the company assure me that nothing will happen to Alliance Boots debt if and when Walgreen decides to buy the rest of the business. According to these people familiar with the matter, change of control clauses were addressed when Walgreen bought its stake in 2012. Walgreen will just take on Alliance Boots's debt without having to refinance, according to people familiar with the situation.

So, I guess Alliance Boots's debt pile is hunky dory then.

1 comment:

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