8-KMaterial AgreementsFinancial EventsExhibits & Filings

CARDINAL HEALTH INC 8-K Report, Material Agreement (Jul 22, 2009)

Filed July 22, 2009For Securities:CAH

Summary

This 8-K filing by Cardinal Health, Inc. (CAH) on July 21, 2009, primarily details a material definitive agreement concerning its subsidiary, CareFusion Corporation. CareFusion successfully closed the sale of $1.4 billion in aggregate principal amount of senior notes, comprising $250 million of 4.125% notes due 2012, $450 million of 5.125% notes due 2014, and $700 million of 6.375% notes due 2019. The offering was conducted as a private placement under exemptions from registration, with proceeds of approximately $1.374 billion being held in escrow. The core purpose of this debt issuance is to fund a special dividend to Cardinal Health in connection with its planned spin-off of CareFusion. Cardinal Health intends to distribute at least 80.1% of CareFusion's outstanding common stock to its shareholders. The proceeds will be released upon the completion of this spin-off. If the spin-off does not occur by November 1, 2009, CareFusion is obligated to redeem these notes at a premium.

Key Highlights

  • 1CareFusion, a subsidiary of Cardinal Health, successfully issued $1.4 billion in senior notes across three tranches: 2012, 2014, and 2019 maturities.
  • 2The net proceeds from the note offering are approximately $1.374 billion.
  • 3The debt issuance is directly linked to Cardinal Health's planned spin-off of CareFusion, with proceeds earmarked for a special dividend.
  • 4The notes were sold via a private placement to qualified institutional buyers and non-U.S. persons, relying on exemptions from registration under the Securities Act.
  • 5Proceeds are held in escrow and will be released upon the completion of the CareFusion spin-off.
  • 6A mandatory redemption of the notes at a 101% premium will occur if the spin-off is not completed by November 1, 2009.
  • 7A Separation Agreement was also entered into between Cardinal Health and CareFusion, governing the terms of the spin-off and post-separation relationship.

Frequently Asked Questions

The primary purpose of the senior notes issuance by CareFusion is to raise capital to fund a special dividend to Cardinal Health. This dividend is part of the financial arrangement for Cardinal Health's planned spin-off of CareFusion.

If the spin-off of CareFusion by Cardinal Health is not completed by November 1, 2009, or if Cardinal Health abandons the spin-off, CareFusion is obligated to redeem all of the issued notes at a mandatory redemption price of 101% of the aggregate principal amount, plus accrued and unpaid interest.

No, the notes were offered and sold in a private placement under exemptions from registration provided by Section 4(2) of the Securities Act and Rule 144A. They were sold to qualified institutional buyers and in offshore transactions, not through a public offering requiring SEC registration at the time of sale.

This filing indicates Cardinal Health's plan to spin off CareFusion. While CareFusion is issuing its own debt, Cardinal Health is arranging the terms of the separation through a Separation Agreement. The proceeds from CareFusion's debt issuance are intended to facilitate this spin-off, with the ultimate goal of Cardinal Health distributing a majority of CareFusion's stock to its own shareholders.