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Debt obligations
 9 Months Ended
Sep. 30, 2024
Debt obligations
NOTE 7 – Debt obligations:
 
a.
Short-term debt:
 
    
Interest rate as of
September 30, 2024
    
Maturity
     
September 30,
     
December 31,
  
    
2024
     
2023
  
                 
(U.S. $ in millions)
  
Convertible senior debentures
      0.25 %      2026        23        23  
Current maturities of long-term liabilities
 
      2,557        1,649  
  
 
 
     
 
 
  
Total short-term debt
 
    $ 2,580      $ 1,672  
  
 
 
     
 
 
  
Convertible senior debentures
The principal amount of Teva’s 0.25% convertible senior debentures due in 2026 was $23 million as of September 30, 2024 and as of December 31, 2023. 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’.
b.
Long-term debt:
 
    
Interest rate as of
September 30, 2024
    
Maturity
     
September 30,
2024
    
December 31,
2023
  
                 
(U.S. $ in millions)
  
Senior notes USD 1,250 million (4)
      6.00 %      2024        —        956  
Senior notes EUR 1,500 million (5)
      1.13 %      2024        700       693  
Senior notes EUR 1,000 million
      6.00 %      2025        459       453  
Senior notes USD 1,000 million
      7.13 %      2025        427       427  
Senior notes EUR 900 million
      4.50 %      2025        554       547  
Senior notes CHF 350 million
      1.00 %      2025        417       416  
Senior notes USD 3,500 million
      3.15 %      2026        3,374       3,374  
Senior notes EUR 700 million
      1.88 %      2027        781       771  
Sustainability-linked senior notes USD 1,000 million (1)(*)
      4.75 %      2027        1,000       1,000  
Sustainability-linked senior notes EUR 1,100 million (1)(*)
      3.75 %      2027        1,229       1,215  
Senior notes USD 1,250 million
      6.75 %      2028        1,250       1,250  
Senior notes EUR 750 million
      1.63 %      2028        834       826  
Sustainability-linked senior notes USD 1,000 million (2)(*)
      5.13 %      2029        1,000       1,000  
Sustainability-linked senior notes USD 600 million (3)(*)
      7.88 %      2029        600       600  
Sustainability-linked senior notes EUR 800 million (3)(*)
      7.38 %      2029        895       884  
Sustainability-linked senior notes EUR 1,500 million (2)(*)
      4.38 %      2030        1,676       1,656  
Sustainability-linked senior notes USD 500 million (3)(*)
      8.13 %      2031        500       500  
Sustainability-linked senior notes EUR 500 million (3)(*)
      7.88 %      2031        558       552  
Senior notes USD 789 million
      6.15 %      2036        783       783  
Senior notes USD 2,000 million
      4.10 %      2046        1,986       1,986  
       
 
 
    
 
 
  
Total senior notes
           19,023       19,889  
Other long-term debt
           2       1  
Less current maturities
           (2,557 )      (1,649 ) 
Less debt issuance costs
           (68 )      (80 ) 
       
 
 
    
 
 
  
Total senior notes and loans
         $ 16,400     $ 18,161  
       
 
 
    
 
 
  
 
(1)
If Teva fails to achieve certain sustainability performance targets, a
one-time
premium payment of
0.15%-0.45%
out of the principal amount will be paid at maturity or upon earlier redemption, if such redemption is on or after May 9, 2026.
(2)
If Teva fails to achieve certain sustainability performance targets, the interest rate shall increase by
0.125%-0.375%
per annum, from and including
May 9, 2026
.
(3)
If Teva fails to achieve certain sustainability performance targets, the interest rate shall increase by
0.100%-0.300%
per annum, from and including September 15, 2026.
(4)
In April 2024, Teva repaid $956 million of its 6% senior notes due 2024 at maturity.
(5)
In October 2024, Teva repaid $685 million of its 1.13% senior notes due 2024 at maturity.
*
Interest rate adjustments and a potential
one-time
premium payment related to the sustainability-linked bonds are treated as bifurcated embedded derivatives. See note 8c.
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, if any. The long-term debt outlined in the above table is generally redeemable at any time at varying redemption prices plus accrued and unpaid interest.
 
Teva’s debt as of September 30, 2024 was effectively denominated in the following currencies: 58% in U.S. dollars, 40% in euro and 2% in Swiss franc.
Teva’s principal sources of short-term liquidity are its cash on hand, existing cash investments, liquid securities and available credit facilities, primarily its $1.8 billion unsecured syndicated sustainability-linked revolving credit facility entered into in April 2022, as amended on February 6, 2023 and on May 3, 2024 (“RCF”).
The RCF had an initial maturity date of
April 2026
with two
one-year
extension options. In April 2024, an extension option was exercised and the RCF maturity date was extended to April 2027. The RCF contains certain covenants, including certain limitations on incurring liens and indebtedness and maintenance of certain financial ratios, including a maximum leverage ratio, which becomes more restrictive over time.
On May 3, 2024, the terms of the RCF were amended to update the Company’s maximum permitted leverage ratio under the RCF for certain periods. Under the terms of the RCF, as amended, the Company’s leverage ratio shall not exceed (i) 4.00x in 2024, 2025 and in the first quarter of 2026, (ii) 3.75x in the second, third and fourth quarters of 2026 and (iii) 3.50x in the first quarter of 2027 and onwards. The RCF permits the Company to increase the maximum leverage ratio if it consummates or commences certain material transactions.
Under the RCF, as amended, the applicable margin used to calculate the interest rate under the RCF is linked to one sustainability performance target, the number of new regulatory submissions in low and middle-income countries.
Proceeds from borrowings under the RCF can be used for general corporate purposes, including repaying existing debt. As of September 30,
2024
, and as of the date of this Quarterly Report on Form
10-Q,
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 the 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 circumstances referred to above, 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 and sustainability-linked senior notes is outstanding, could lead to an event of default under the Company’s senior notes and sustainability-linked 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 the financial statements are issued.