Summary
Cardinal Health, Inc. (CAH) filed an 8-K on November 6, 2006, reporting on a material definitive agreement. Specifically, the company's wholly-owned subsidiary, Cardinal Health Funding, LLC, entered into a second amendment and restatement of its receivables purchase agreement on October 31, 2006. This amendment extends an $800 million revolving receivables purchase facility for an additional 364 days. This facility is crucial for the company's liquidity and ongoing operations, allowing it to securitize its trade receivables.
Key Highlights
- 1Cardinal Health's subsidiary, Cardinal Health Funding, LLC, amended and restated its receivables purchase agreement.
- 2The $800 million revolving receivables purchase facility has been extended by an additional 364 days.
- 3This agreement facilitates the securitization of the company's trade receivables through various subsidiaries and financial institutions.
- 4The transaction structure involves the sale of existing and future trade receivables to Cardinal Health Funding, LLC.
- 5The company, through its subsidiary Griffin Capital, LLC, acts as a servicer for these receivables.
- 6Standard amortization events, including defaults, breaches, and changes of control, are outlined in the agreement.
- 7Several major financial institutions, including The Bank of Nova Scotia, ABN AMRO Bank N.V., and JPMorgan Chase Bank, N.A., are involved as agents and participants in the facility.
Frequently Asked Questions
The main purpose of the agreement is to extend Cardinal Health's $800 million revolving receivables purchase facility by an additional 364 days. This facility allows the company to raise cash by selling a percentage of its eligible trade receivables to financial institutions, providing ongoing liquidity.
The key parties include Cardinal Health Funding, LLC (the company's subsidiary), Griffin Capital, LLC (servicer), various conduits and financial institutions such as The Bank of Nova Scotia, ABN AMRO Bank N.V., and JPMorgan Chase Bank, N.A. (as agent and managing agent).
The extension of this significant liquidity facility suggests that Cardinal Health has successfully maintained its access to a crucial source of funding. This provides financial stability and operational flexibility, enabling the company to continue its business operations smoothly.
Yes, the agreement outlines customary amortization events that could trigger termination or changes to the facility. These include failure to make payments, misrepresentations, cross-defaults to other material debt, breaches of covenants, changes of control, and certain bankruptcy events.