8-KMaterial AgreementsExhibits & Filings

CARDINAL HEALTH INC 8-K Report, Material Agreement (Mar 2, 2023)

Filed March 2, 2023For Securities:CAH

Summary

Cardinal Health, Inc. (CAH) filed an 8-K on March 1, 2023, detailing a significant update to its financing structure. The company entered into a Third Amended and Restated Five-Year Credit Agreement, which provides access to a $2.0 billion revolving credit facility and extends its term to February 25, 2028. This refinancing enhances the company's financial flexibility and liquidity. The agreement includes customary covenants, with a key financial covenant requiring a Consolidated Net Leverage Ratio of no greater than 3.75 to 1.00. Notably, the new credit agreement incorporates provisions for Environmental, Social, and Governance (ESG) targets, allowing for potential adjustments to facility fees and margins based on performance. This demonstrates Cardinal Health's commitment to integrating ESG considerations into its financing. The facility backs the company's commercial paper program and is available for general corporate purposes, underscoring its importance for ongoing operational needs.

Key Highlights

  • 1Cardinal Health entered into a new Five-Year Credit Agreement on February 27, 2023.
  • 2The agreement provides access to a $2.0 billion revolving credit facility.
  • 3The maturity date for the revolving credit facility has been extended to February 25, 2028, with options for further one-year extensions.
  • 4A key financial covenant requires a Consolidated Net Leverage Ratio not to exceed 3.75 to 1.00.
  • 5The credit agreement includes provisions for incorporating ESG targets, potentially impacting facility fees and margins.
  • 6The revolving credit facility supports the company's commercial paper program and general corporate purposes.

Frequently Asked Questions

The main purpose of the Third Amended and Restated Five-Year Credit Agreement is to provide Cardinal Health with continued access to a $2.0 billion revolving credit facility and to extend the maturity of this facility to February 25, 2028. This strengthens the company's financial flexibility and liquidity for general corporate purposes and to back its commercial paper program.

A primary financial covenant requires Cardinal Health to maintain a Consolidated Net Leverage Ratio of no greater than 3.75 to 1.00 as of the last day of any fiscal quarter. This is a standard measure used by lenders to assess a company's debt levels relative to its earnings.

The credit agreement allows Cardinal Health to establish Key Performance Indicators related to its ESG targets in consultation with JPMorgan as the sustainability coordinator. Based on performance against these targets, there's a possibility for adjustments to the facility fee and margins.

The revolving credit facility has a total commitment of $2.0 billion, and its maturity date is set for February 25, 2028. The agreement also permits the company to seek extensions of up to two additional one-year periods, subject to lender consent and other conditions.