Teva Announces $1.5 Billion Debt Tender Offer

On Friday, one day after publishing its earnings reports for the third quarter, Teva Pharmaceutical Industries Ltd. announced a debt tender offer of up to $1.5 billion, with senior notes offered in both dollars and euros. Teva has estimated it may list the newly issued bonds in the future.

Teva closed up 9.8% on NYSE Friday, after jumping Thursday following CEO Kåre Schultz’s statement that the company’s profitability might improve in 2020.

The new debt issuance is intended to help Teva manage the debentures it needs to repay in 2020, standing at $2 billion, and in 2021, standing at $4 billion—the result of the debt it raised to buy Actavis for $40.5 billion in 2016. Currently, the company has $1.2 billion in its coffers. The new issuance piles uncertainty on Teva’s already doubtful ability to carry its debt covenants.

Teva ended the third quarter of 2019 with a net debt of $25.7 billion, a significant drop from the $34 billion it owed two years ago. However, the amount left is still daunting, especially considering Teva’s continuously decreasing revenues and profitability. On Thursday, Teva reported a free cash flow of $551 million and slightly upped its annual cash flow outlook to between $1.72 billion and $2 billion. That cash flow will need to go towards paying the company’s covenants in 2021.