8-KMaterial AgreementsExhibits & Filings

CARDINAL HEALTH INC 8-K Report, Material Agreement (Oct 2, 2019)

Filed October 2, 2019For Securities:CAH

Summary

Cardinal Health Inc. (CAH) has filed an 8-K report detailing amendments to its financing agreements. The primary focus is the extension of its $1.0 billion committed receivables sales facility program through September 30, 2022. This extension provides continued access to liquidity and demonstrates ongoing support from its banking partners for this crucial financing mechanism. Additionally, the filing outlines an amendment to a performance guaranty which imposes specific leverage ratio covenants. The company must maintain a Consolidated Net Leverage Ratio of no greater than 4.00-to-1.00 through December 2020, stepping down to 3.75-to-1.00 starting March 2021. These covenants are important for investors to monitor as they represent financial constraints that could impact future strategic decisions or capital allocation.

Key Highlights

  • 1Extension of $1.0 billion receivables sales facility program until September 30, 2022.
  • 2The receivables facility provides ongoing access to committed liquidity for the company.
  • 3New Consolidated Net Leverage Ratio covenant introduced, requiring a ratio of no greater than 4.00-to-1.00 through December 2020.
  • 4The maximum permitted Consolidated Net Leverage Ratio will decrease to 3.75-to-1.00 starting in March 2021.
  • 5The amendments involve key financial institutions, including Wells Fargo Bank, N.A. and MUFG Bank, Ltd.
  • 6The filing indicates routine financial advisory and banking services provided by these institutions.

Frequently Asked Questions

The main purpose is to extend the term of Cardinal Health's $1.0 billion committed receivables sales facility program. This extension pushes the maturity date to September 30, 2022, ensuring continued access to this important source of funding.

A new covenant requires Cardinal Health to maintain a Consolidated Net Leverage Ratio of no greater than 4.00-to-1.00 at the end of each fiscal quarter from September 2019 through December 2020. This ratio will further tighten to a maximum of 3.75-to-1.00 starting in March 2021.

The extension of the receivables facility provides ongoing liquidity. However, the new leverage ratio covenants impose stricter financial discipline, which investors should monitor. Meeting these targets will be crucial for maintaining compliance and avoiding potential restrictions.

Key financial institutions involved include Wells Fargo Bank, N.A., MUFG Bank, Ltd., The Bank of Nova Scotia, Atlantic Asset Securitization LLC, Credit Agricole Corporate and Investment Bank New York Branch, U.S. Bank National Association, PNC Bank, National Association, and Victory Receivables Corporation.