Jazz Pharmaceuticals Announces Successful Completion of Term Loan Repricing and Irrevocable Election of Settlement Method for the 2.000% Exchangeable Senior Notes due 2026

Rhea-AI Summary

Jazz Pharmaceuticals (Nasdaq: JAZZ) has successfully completed a repricing of its $2.7 billion U.S. dollar term loans. The applicable margin above Term SOFR has been reduced by 75 basis points, from 300 to 225 basis points, with the credit spread adjustment removed. This is expected to result in annual interest savings of approximately $23 million.

Additionally, Jazz Investments I , a subsidiary of Jazz Pharmaceuticals, has irrevocably elected to fix the settlement method for exchanges of its 2.000% Exchangeable Senior Notes due 2026. The new settlement method involves a combination of cash and ordinary shares, with a specified cash amount of at least $1,000 per $1,000 principal amount of notes exchanged.

Positive

• Reduced interest rate on $2.7 billion term loans by 75 basis points
• Expected annual interest savings of $23 million
• Fixed settlement method for 2026 Exchangeable Senior Notes, providing clarity for investors

Negative

• None.

Insights

Financial Analyst

Jazz Pharmaceuticals' Term Loan Repricing is a significant event for investors. The reduction in the applicable margin by <75 basis points> and the removal of the credit spread adjustment are expected to lead to . This move demonstrates effective financial management and optimization of borrowing costs, which is important given the company’s substantial debt load.

For retail investors, this repricing is a positive development. Lower interest expenses can improve and thus, potentially increase (EPS). This can be a catalyst for upward movement in the stock price, especially if the savings are directed towards growth initiatives or shareholder returns. Additionally, this may enhance the company’s credit profile, making future borrowing more favorable.

Investors should watch for any subsequent balance sheet improvements and management's strategic use of the interest savings to gauge the long-term benefits.

Market Research Analyst

The irrevocable election of the settlement method for the <2.000% Exchangeable Senior Notes due 2026> is another noteworthy move. By fixing the settlement method to a combination of , the company provides more certainty around its obligations related to these notes. This can be seen as a risk management strategy, ensuring that there is no significant dilution of shares that could adversely impact existing shareholders.

This action reflects a proactive approach to managing potential conversion scenarios and aligns with market best practices. For investors, this reduces the uncertainty associated with the convertible debt structure, thereby potentially mitigating volatility in the stock. The company's ability to deliver up to $1,000 in cash per $1,000 principal amount of the notes instills confidence in its liquidity management.

Legal Expert

From a legal standpoint, providing written notice to the exchange agent, trustee and noteholders about the settlement method signifies thorough and transparency. It underscores Jazz Pharmaceuticals' commitment to clear communication and adherence to contractual obligations, which is important in maintaining investor trust and reducing legal risks.

This move is beneficial for investors as it diminishes the likelihood of disputes or litigation related to the repayment or conversion of these notes. By setting clear terms, the company mitigates potential legal uncertainties that could arise from ambiguous settlement methods.

DUBLIN, July 22, 2024 /PRNewswire/ -- Jazz Pharmaceuticals plc (Nasdaq: JAZZ) ("Jazz Pharmaceuticals") today announced that it has completed a repricing of the approximately $2.7 billion outstanding balance of its U.S. dollar term loans under its credit facility. The applicable margin above Term SOFR will be reduced by 75 basis points (from 300 basis points to 225 basis points) and the credit spread adjustment will be removed, resulting in anticipated interest savings of approximately $23 million on an annualized basis. All other terms are substantially unchanged.

Irrevocable Election of Settlement Method for the 2.000% Exchangeable Senior Notes due 2026

Jazz Investments I Limited (the "Issuer"), a subsidiary of Jazz Pharmaceuticals, today announced that it provided written notice to the exchange agent, the trustee and the holders of its 2.000% Exchangeable Senior Notes due 2026 (the "2026 notes") that it has irrevocably elected to fix the settlement method for exchanges of the 2026 notes to a combination of cash and ordinary shares of Jazz Pharmaceuticals with a specified cash amount per $1,000 principal amount of 2026 notes exchanged equal to or in excess of $1,000. As a result, for any 2026 notes exchanged subsequent to such notice, an exchanging holder will receive (i) up to $1,000 in cash per $1,000 principal amount of 2026 notes exchanged and (ii) cash, ordinary shares, or any combination thereof, at the Issuer's election, in respect of the remainder, if any, of its exchange obligation in excess of $1,000 per $1,000 principal amount of 2026 notes exchanged.  

About Jazz Pharmaceuticals 
Jazz Pharmaceuticals plc (Nasdaq: JAZZ) is a global biopharma company whose purpose is to innovate to transform the lives of patients and their families. We are dedicated to developing life-changing medicines for people with serious diseases — often with limited or no therapeutic options. We have a diverse portfolio of marketed medicines, including leading therapies for sleep disorders and epilepsy, and a growing portfolio of cancer treatments. Our patient-focused and science-driven approach powers pioneering research and development advancements across our robust pipeline of innovative therapeutics in oncology and neuroscience. Jazz is headquartered in Dublin, Ireland with research and development laboratories, manufacturing facilities and employees in multiple countries committed to serving patients worldwide. Please visit www.jazzpharmaceuticals.com for more information.

Caution Concerning Forward-Looking Statements 
This press release contains forward-looking statements, including, but not limited to, statements related to anticipated interest savings; settlement and exchanges of the 2026 notes; and other statements that are not historical facts. These forward-looking statements are based on Jazz Pharmaceuticals' current plans, objectives, estimates, expectations and intentions and inherently involve significant risks and uncertainties. Do not place undue reliance on these forward-looking statements, which speak only as of the date hereof. Actual results and the timing of events could differ materially from those anticipated in such forward-looking statements as a result of these risks and uncertainties, which include, without limitation, the Company's ability to pay cash amounts and issue ordinary shares due upon exchange of the 2026 notes; the Company's ability to service its debt obligations; and other risks and uncertainties affecting Jazz Pharmaceuticals, including those described from time to time under the caption "Risk Factors" and elsewhere in Jazz Pharmaceuticals' Securities and Exchange Commission filings and reports, including Jazz Pharmaceuticals' Annual Report on Form 10-K for the year ended December 31, 2023, as supplemented by its Quarterly Report on Form 10-Q for the quarter ended March 31, 2024, and any future filings and reports by Jazz Pharmaceuticals. Other risks and uncertainties of which Jazz Pharmaceuticals is not currently aware may also affect Jazz Pharmaceuticals' forward-looking statements and may cause actual results and the timing of events to differ materially from those anticipated. The forward-looking statements herein are made only as of the date hereof or as of the dates indicated in the forward-looking statements, even if they are subsequently made available by Jazz Pharmaceuticals on its website or otherwise. Jazz Pharmaceuticals undertakes no obligation to update or supplement any forward-looking statements to reflect actual results due to any new information, future events, changes in its expectations or other circumstances that exist after the date as of which the forward-looking statements were made.

Contacts:

Investors:
Andrea N. Flynn, Ph.D.
Vice President, Head, Investor Relations
Jazz Pharmaceuticals plc
InvestorInfo@jazzpharma.com
Ireland +353 1 634 3211
U.S. +1 650 496 2717

Media:
Kristin Bhavnani
Head of Global Corporate Communications
Jazz Pharmaceuticals plc
CorporateAffairsMediaInfo@jazzpharma.com
Ireland +353 1 637 2141
U.S. +1 215 867 4948

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SOURCE Jazz Pharmaceuticals plc

FAQ

What is the new interest rate for Jazz Pharmaceuticals' term loans after the repricing?

After the repricing, the applicable margin above Term SOFR for Jazz Pharmaceuticals' term loans has been reduced to 225 basis points, down from 300 basis points previously.

How much annual interest savings does Jazz Pharmaceuticals (JAZZ) expect from the term loan repricing?

Jazz Pharmaceuticals anticipates annual interest savings of approximately $23 million as a result of the term loan repricing completed on July 22, 2024.

What is the new settlement method for Jazz Pharmaceuticals' 2026 Exchangeable Senior Notes?

The new settlement method for the 2026 Exchangeable Senior Notes involves a combination of cash and ordinary shares, with a specified cash amount of at least $1,000 per $1,000 principal amount of notes exchanged.

When did Jazz Pharmaceuticals (JAZZ) announce the completion of its term loan repricing?

Jazz Pharmaceuticals announced the successful completion of its term loan repricing on July 22, 2024.