Summary
Cardinal Health, Inc. (CAH) has entered into a new unsecured Five-Year Credit Agreement, establishing a $1.5 billion revolving credit facility. This facility is designed to support the company's existing commercial paper program and can be used for general corporate purposes, providing essential liquidity and financial flexibility. The new agreement replaces a previous credit facility of the same size and term, which was terminated without penalty. The company confirmed it was in compliance with the financial covenants of its prior agreement as of March 31, 2011, and the new agreement includes similar customary covenants, such as maintaining a consolidated interest coverage ratio of at least 4-to-1 and a consolidated leverage ratio of no more than 3.25-to-1. This refinancing activity demonstrates Cardinal Health's proactive approach to managing its capital structure and ensuring access to funding. The inclusion of standard covenants suggests a commitment to financial discipline and transparency for lenders. Investors should view this as a positive development, indicating operational stability and continued access to necessary financial resources for ongoing business operations and strategic initiatives.
Key Highlights
- 1Cardinal Health entered into a new unsecured Five-Year Credit Agreement on May 12, 2011.
- 2The new agreement provides a $1.5 billion revolving credit facility.
- 3This facility serves as a backup for the company's existing $1.5 billion commercial paper program.
- 4The credit facility can be used for general corporate purposes.
- 5The company terminated its previous Five-Year Credit Agreement (dated January 24, 2007) without incurring penalties.
- 6The new agreement includes customary covenants, such as a consolidated interest coverage ratio of at least 4-to-1 and a consolidated leverage ratio of no more than 3.25-to-1.
- 7Cardinal Health was in compliance with its previous financial covenants as of March 31, 2011.