Item 7.01. Regulation F-D Disclosure
On January 11, 2021, PPD, Inc. (the "Company") announced the allocation of its
expected new (i) $3,050.0 million aggregate principal amount senior secured
first-lien term loan facility (the "Term Facility") maturing in January 2028 and
(ii) $600.0 million committed principal amount senior secured first-lien
revolving credit facility (the "Revolving Facility" and, together with the Term
Facility, the "Bank Facilities") maturing in January 2026. The Term Facility
loan is initially expected to bear interest at Adjusted LIBOR plus a margin of
2.25% with a "LIBOR floor" of 0.50% and loans under the Revolving Facility are
initially expected to bear interest at the option of the Company either Adjusted
LIBOR plus a margin of 2.00% with a "LIBOR floor" of 0.00% or Base Rate plus a
margin of 1.00% with a "Base Rate floor" of 1.00%. Pricing on each of the Bank
Facilities are expected to include a 25 basis point step-down to the respective
interest rate margins upon the achievement and maintenance of a total net
leverage ratio of 3.75:1.00 or lower or upon the public announcement that the
Company's corporate credit rating from each of Moody's and S&P is equal to or
better than Ba2 or BB, respectively.
The proceeds from borrowings under the Term Facility, together with cash on
hand, are expected to be used to (i) refinance in full the principal amount
outstanding and accrued and unpaid interest, fees and other amounts then due and
owing under, the Credit Agreement dated as of August 18, 2015, as amended from
time to time, among Jaguar Holding Company I, the borrowers party thereto, the
lenders party thereto and Credit Suisse AG, Cayman Islands Branch, as
administrative agent and collateral agent, and (ii) pay fees and expenses
relating to the Bank Facilities. The closing of the Bank Facilities is subject
to satisfaction of customary closing conditions and is expected to occur on
January 13, 2021. If the Bank Facilities close on January 13, 2021 as expected,
the Company estimates annual run-rate gross interest expense (as calculated in
accordance with GAAP, inclusive of cash interest expense, amortization of
financing fees and expenses and cash costs related to interest rate swaps) to be
approximately $187 million. This is based on the initial Term Facility interest
rate of Adjusted LIBOR plus a margin of 2.25%, current 1-month LIBOR of 0.13%
and the Company maintaining full hedge accounting effectiveness on its
outstanding interest rate swaps. Due to the 0.00% LIBOR floor on the
$3,000.0 million of interest rate swaps, the Company's run-rate interest expense
would be approximately $191 million if 1-month LIBOR decreased to 0.00% and
approximately $176 million if 1-month LIBOR increased to 0.50%, with immaterial
movement if LIBOR moved outside the range of 0.00-0.50%.
The information in Item 7.01 of this Current Report on Form 8-K shall not be
deemed "filed" for purposes of Section 18 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities
of that section, nor shall it be deemed incorporated by reference in any filing
under the Securities Act of 1933, as amended, or the Exchange Act, except as
expressly set forth by specific reference in such filing.
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Forward-Looking Statements
This Current Report on Form 8-K contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended (the
"Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). These statements often include words such as
"anticipate," "expect," "suggest," "plan," "believe," "intend," "project,"
"forecast," "estimates," "targets," "projections," "should," "could," "would,"
"may," "might," "will" and other similar expressions, including forward-looking
statements about the impact from the novel coronavirus disease (the "COVID-19
pandemic"), relating to the refinancing of our senior secured credit facilities
and the expected run-rate gross interest expense. Although we believe that these
forward-looking statements are based on reasonable assumptions at the time they
are made, actual results might differ materially from those expressed in these
forward-looking statements. Factors that might materially affect such
forward-looking statements include: the magnitude, continued duration,
geographic reach and ongoing impact on the global economy and capital and credit
markets of the COVID-19 pandemic; the current and uncertain future impact from
the COVID-19 pandemic on our business, growth, reputation, prospects, financial
condition, results of operations (including components of our financial
results), cash flows and liquidity; the fragmented and highly competitive nature
of the drug development services industry; changes in trends in the
biopharmaceutical industry, including decreases in research and development
spending and outsourcing; our ability to keep pace with rapid technological
changes that could make our services less competitive or obsolete; the U.S. and
international health care industry is subject to political, economic and/or
regulatory influences and changes, such as health care reform, all of which
could adversely affect both our customers' and our businesses; any failure of
our backlog to accurately predict or convert into future revenue; the fact that
our customers can terminate, delay or reduce the scope of our contracts with
them upon short notice or with no notice; the impact of industry, customer and
therapeutic area concentration; our ability to accurately price our contracts
and manage our costs associated with performance of such contracts; any failures
in our information and communication systems, including cybersecurity breaches,
impacting us or our customers, clinical trial participants or employees; any
failure to perform services in accordance with contractual requirements,
regulatory standards and ethical standards; our ability to recruit, retain and
motivate key personnel, including the loss of any key executive who becomes
seriously ill with COVID-19; our ability to access clinical research sites,
attract suitable investigators or enroll a sufficient number of patients
(including as a result of the COVID-19 pandemic) for our customers' clinical
trials; any failure by us to comply with numerous privacy laws; our dependence
on third parties for critical goods and support services, including a
significant impact from the COVID-19 pandemic on our suppliers; our dependence
on our technology network, and the impact from upgrades to the network; any
violation of laws, including laws governing the conduct of clinical trials or
other biopharmaceutical research, and anti-corruption laws, such as the U.S.
Foreign Corrupt Practices Act and the United Kingdom Bribery Act of 2010;
competition between our existing and potential customers and the potential
negative impact on our business; our management of business restructuring
transactions and the integration of acquisitions; risks related to the drug
development services industry that could result in potential liability that
could affect our business, reputation and financial condition; any failure of
our insurance to cover the potential liabilities, including indemnification
obligations, associated with the operation of our business and provision of
services; our use of biological and hazardous materials, which could violate law
or cause injury or death, resulting in liability; disruptions to our operations
by the occurrence of a natural disaster, pandemic (such as the COVID-19
pandemic) or other catastrophic events; international or U.S. economic,
currency, political and other risks, such as those from the COVID-19 pandemic;
economic conditions and regulatory changes relating to the United Kingdom's exit
from the European Union; any inability to adequately protect our intellectual
property or the security of our systems and the data stored therein;
consolidation amongst our customers, and the potential for rationalization of
the combined drug development pipeline, resulting in fewer products in clinical
development; any patent or other intellectual property litigation we might be
involved in; changes in tax laws, such as U.S. tax reform, or interpretations of
existing tax laws; our investments in third parties, which are illiquid and
subject to loss; the substantial value of our goodwill and intangible assets,
which we might not fully realize, resulting in impairment losses; difficult and
volatile conditions in the capital and credit markets and in the overall
economy, including those caused by the COVID-19 pandemic; risks related to our
indebtedness; risks related to ownership of our common stock; the significant
influence certain stockholders have over us; and other risk factors set forth in
the Company's Annual Report on Form 10-K for the fiscal year ended December 31,
2019 as updated by the Company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 2020, copies of which are available free of charge on the
Securities and Exchange Commission's website at www.sec.gov. These cautionary
statements should not be construed by you to be exhaustive and are made only as
of the date hereof. We undertake no obligation to update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.
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