Summary
Cardinal Health, Inc. (CAH) filed an 8-K report on November 21, 2005, detailing a significant update to its credit facilities. The company entered into a new unsecured Five-Year Credit Agreement on November 18, 2005, establishing a revolving credit facility of up to $1.0 billion. This new facility is intended for general corporate purposes and replaces two prior $750 million revolving credit facilities, which were terminated on the same day without penalty. This refinancing indicates a strategic move by Cardinal Health to consolidate its borrowing capacity into a single, larger facility with a five-year term. The agreement includes customary covenants, such as maintaining a minimum net worth of $5 billion, and standard events of default that could lead to acceleration of outstanding amounts. Additionally, the report disclosed that the company has initiated a Rule 10b5-1 trading plan to repurchase up to $750 million of its common stock under its previously announced $1.0 billion share repurchase program.
Key Highlights
- 1Cardinal Health entered into a new unsecured Five-Year Credit Agreement for $1.0 billion, effective November 18, 2005.
- 2The new credit facility replaces two existing $750 million revolving credit facilities, consolidating borrowing capacity.
- 3The facility is designated for general corporate purposes and has a five-year term.
- 4The agreement includes a covenant requiring the company to maintain a minimum net worth of $5 billion.
- 5Standard events of default are outlined, with potential acceleration of debt if certain conditions are met (e.g., payment defaults exceeding 2% of consolidated tangible net worth).
- 6Cardinal Health initiated a Rule 10b5-1 trading plan to repurchase up to $750 million of its common shares.
- 7The termination of the previous credit agreements occurred on November 18, 2005, with no penalties incurred.