Summary
Cardinal Health, Inc. (CAH) announced on June 20, 2016, the execution of an Amended and Restated Five-Year Credit Agreement, effective June 16, 2016. This agreement is a significant development for the company's financing structure, demonstrating continued access to capital markets and an enhanced liquidity position. The key changes involve extending the revolving credit facility's maturity and increasing its availability, which provides greater financial flexibility for general corporate purposes and supports its commercial paper program. Importantly, this updated credit facility also removes the consolidated interest coverage ratio covenant, potentially signaling increased confidence from lenders in Cardinal Health's financial stability or a strategic move to streamline financial reporting requirements. While the revolving credit facility is being expanded, the company is simultaneously reducing its committed receivables sales facility, indicating a strategic shift in how it manages working capital or access to funding. Investors should view this as a positive step towards strengthening the company's financial foundation and its ability to execute its business strategy.
Key Highlights
- 1Entered into an Amended and Restated Five-Year Credit Agreement effective June 16, 2016.
- 2Extended the revolving credit facility maturity to June 16, 2021.
- 3Increased the revolving credit facility availability to $1.75 billion.
- 4Removed the requirement to maintain a consolidated interest coverage ratio.
- 5The increased revolving credit facility supports the company's commercial paper program and general corporate purposes.
- 6Reduced the committed receivables sales facility program from $950 million to $700 million, effective June 30, 2016.
- 7Confirms ongoing relationships with multiple major financial institutions for credit and advisory services.