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Debt obligations

12 Months Ended

Dec. 31, 2020

Debt obligations

NOTE 9—Debt obligations:

a. Short-term debt:

						December 31,
		Weighted average interest rate as of December 31, 2020		Maturity		2020				2019
						(U.S. $ in millions)
Convertible debentures		0.25%		2026			514				514
Current maturities of long-term liabilities							2,674				1,831
Total short term debt						$	3,188			$	2,345

Convertible senior debentures

Teva 0.25% convertible senior debentures, due 2026, principal amount as of December 31, 2020 and 2019 were $514 million. These convertible senior debentures include a “net share settlement” feature according to which the principal amount will be paid in cash and in case of conversion, only the residual conversion value above the principal amount will be paid in Teva shares. Due to the “net share settlement” feature, exercisable at any time, these convertible senior debentures are classified in the Balance Sheet under short-term debt. Holders of the convertible debentures were able to cause Teva to redeem the debentures on February 1, 2021, and $491 million of the convertible debentures were redeemed on such date.

b. Long-term debt:

		Weighted average interest rate as of December 31, 2020				Maturity				December 31, 2020				December 31, 2019
		%								(U.S. $ in millions)
Senior notes EUR 1,010 million (1)			0.38	%			2020			$	—			$	1,131
Senior notes EUR 1,500 million			1.13	%			2024				1,839				1,673
Senior notes EUR 1,300 million			1.25	%			2023				1,595				1,451
Senior notes EUR 900 million			4.50	%			2025				1,107				1,008
Senior notes EUR 750 million			1.63	%			2028				916				833
Senior notes EUR 700 million			3.25	%			2022				861				784
Senior notes EUR 700 million			1.88	%			2027				860				782
Senior notes EUR 1,000 million			6.00	%			2025				1,230				1,120
Senior notes USD 1,000 million			7.13	%			2025				1,000				1,000
Senior notes USD 3,500 million			3.15	%			2026				3,495				3,494
Senior notes USD 1,475 million			2.20	%			2021				1,472				1,474
Senior notes USD 3,000 million			2.80	%			2023				2,996				2,995
Senior notes USD 2,000 million			4.10	%			2046				1,986				1,985
Senior notes USD 1,250 million			6.00	%			2024				1,250				1,250
Senior notes USD 1,250 million			6.75	%			2028				1,250				1,250
Senior notes USD 844 million			2.95	%			2022				853				856
Senior notes USD 789 million			6.15	%			2036				783				782
Senior notes USD 700 million (2)			2.25	%			2020				—				700
Senior notes USD 613 million			3.65	%			2021				616				618
Senior notes USD 588 million			3.65	%			2021				586				587
Senior notes CHF 350 million			0.50	%			2022				397				361
Senior notes CHF 350 million			1.00	%			2025				398				362
Total senior notes											25,490				26,496
Other long-term debt			1.08	%			2026				1				1
Less current maturities											(2,674	)			(1,831	)
Less debt issuance costs											(86	)			(103	)
Total senior notes and loans										$	22,731			$	24,562

(1) In July 2020, Teva repaid at maturity €1,010 million of its 0.375% senior notes.

(2) In March 2020, Teva repaid at maturity $700 million of its 2.25% senior notes. 

Long term debt was issued by several indirect wholly-owned subsidiaries of the Company and is fully and unconditionally guaranteed by the Company as to payment of all principal, interest, discount and additional amounts (as defined), if any.

Long term debt as of December 31, 2020 is effectively denominated in the following currencies: U.S. dollar 60%, euro 37% and Swiss franc 3%.

Teva’s principal sources of short-term liquidity are its cash on hand, existing cash investments, liquid securities and available credit facilities, primarily its $2.3 billion unsecured syndicated revolving credit facility entered into in April 2019 (“RCF”).

The RCF agreement provides for two separate tranches, a $1.15 billion tranche A and a $1.15 billion tranche B. Loans and letters of credit will be available from time to time under each tranche for Teva’s general corporate purposes. Tranche A has a maturity date of April 8, 2022, with two one-year extension options, of which $1.065 billion was extended to April 8, 2023. Tranche B has a maturity date of April 8, 2024. 

The RCF contains certain covenants, including certain limitations on incurring liens and indebtedness and maintenance of certain financial ratios, including the requirement to maintain compliance with a net debt to EBITDA ratio, which becomes more restrictive over time. The net debt to EBITDA ratio limit was 5.75x through December 31, 2020, gradually declines to 5.50x in the first and second quarters of 2021, 5.00x in the third and fourth quarters of 2021, and continues to gradually decline over the remaining term of the RCF.

The RCF can be used for general corporate purposes, including repaying existing debt. As of December 31, 2020, and as of the date of this Annual Report on Form 10-K, no amounts were outstanding under the RCF. Based on current and forecasted results, the Company expects that it will not exceed the financial covenant thresholds set forth in the RCF within one year from the date these financial statements are issued.

Under specified circumstances, including non-compliance with any of the covenants described above and the unavailability of any waiver, amendment or other modification thereto, the Company will not be able to borrow under the RCF. Additionally, violations of the covenants, under the above-mentioned circumstances, would result in an event of default in all borrowings under the RCF and, when greater than a specified threshold amount as set forth in each series of senior notes is outstanding, could lead to an event of default under the Company’s senior notes due to cross acceleration provisions. 

Teva expects that it will continue to have sufficient cash resources to support its debt service payments and all other financial obligations within one year from the date that these financial statements are issued.

As of December 31, 2020, the required annual principal payments of long-term debt, excluding debt issuance cost, including convertible senior debentures, starting from the year 2022, are as follows:

		December 31,
		2020
		(U.S. $ in millions)
2022		$	2,111
2023			4,591
2024			3,089
2025			3,735
2026 and thereafter *			9,804
		$	23,330

* Including $514 million convertible notes. See note 9a.

X

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-URI http://asc.fasb.org/topic&trid=2208564

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