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On July 30, 2010, the Company announced a recapitalization pursuant to which it intends to incur, subject to market and other conditions, $2.25 billion of new debt to fund a special cash dividend to its ordinary shareholders of $8.50 per share, or approximately $2.15 billion in the aggregate. The new debt is expected to be comprised of a combination of senior secured term loans and additional unsecured debt. The declaration of the special cash dividend is conditioned on the amendment of its existing Credit Agreement to permit, among other things, the incurrence of the additional indebtedness needed to fund the special cash dividend. Warner Chilcott intends to declare the special cash dividend upon the successful amendment of its Credit Agreement and after obtaining debt financing under acceptable terms.
Because the amount of the proposed special cash dividend that would be treated as a dividend for U.S. tax purposes would depend on the amount of its current and accumulated earnings and profits as determined for U.S. tax purposes as of the end of 2010, the Company is not in a position to determine what portion of the special cash dividend would be treated as a dividend for U.S. tax purposes at this time. The portion of the special cash dividend that is treated as a dividend for U.S. tax purposes would be reported on the Forms 1099 sent to shareholders in 2011. The Company expects that any portion of the special cash dividend that constituted a dividend for U.S. tax purposes would constitute a "qualified dividend" for U.S. tax purposes. To the extent that the special cash dividend received by a shareholder exceeded the portion treated as a dividend for U.S. tax purposes, the excess would first be treated as a return of a taxpayer's tax basis in our ordinary shares and thereafter as capital gain.
The information set forth above is provided only for general use, and does not constitute a complete description of all of the U.S. tax consequences of the receipt of the special cash dividend or the ownership and disposition of our ordinary shares. Shareholders should consult their own tax advisors concerning such consequences.
