Mylan may raise leverage to 4.25x, but continues on deleveraging path

By Devika Patel

Knoxville, Tenn., Nov. 6 – Mylan NV is committed to deleveraging and will continue to pay down debt as it has in the past nine months – approximately $1.2 billion of debt was repaid since the start of 2017 with $420 million paid down in the third quarter.

The company has obtained approval from its lenders to raise its leverage ratio as high as 4.25x from its current 3.6x if necessary, but this will not interfere with it deleveraging plans or its commitment to maintaining an investment-grade credit rating.

“As we said previously, we’re fully committed to continuing to de-leverage and have demonstrated that by paying down our debt by approximately $1.2 billion in the first nine months of the year, which includes approximately $420 million in the third quarter,” chief financial officer Ken Parks said on the company’s third quarter nine months ended Sept. 30 earnings conference call on Monday.

“Our ability to generate strong cash flows reflects the strength and durability of our portfolio, resulting from the decade-long transformation of our business into a global diversified player and is supported by the power of our balance sheet which provides us with the financial flexibility to invest in the future of our business,” Parks said.

The company amended its leverage ratio covenants on its term loans and revolver last year to allow it to raise its leverage ratio up to 4.25x following an acquisition. It plans to keep this covenant in place for 2018.

“Just last week, on Nov. 3, we entered into amendments to the agreements for the 2017 term loans and 2016 revolving facility to extend the leverage covenant of 4.25x through the Dec. 31, 2018 reporting period,” Parks said.

“These amendments provide us with the additional financial flexibility as we manage our capital structure in 2018.

“This does not change in any way our commitment to our deleveraging strategy or maintaining our investment-grade credit rating as we continue to work towards our long-term average debt to EBITDA leverage ratio target of approximately 3x,” Parks said.

At the end of the third quarter, the company’s debt to adjusted EBITDA ratio was 3.6x.

Adjusted free cash flow was $1.91 billion for the nine months ended Sept. 30, up 13% compared to $1.69 billion in the prior year.

Mylan is a pharmaceutical company based in Hatfield, England.

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