8-KMaterial AgreementsFinancial EventsExhibits & Filings

Cigna Group 8-K Report, Material Agreement (Sep 21, 2018)

Filed September 21, 2018For Securities:CI

Summary

Cigna Group (CI) filed an 8-K on September 21, 2018, detailing a significant notes offering by its wholly owned subsidiary, Halfmoon Parent, Inc. This offering raised a total of $13,250,000,000 through various series of Senior Floating Rate Notes and Senior Fixed Rate Notes. The primary purpose of these proceeds is to finance a portion of the cash consideration for Cigna's pending acquisition of Express Scripts Holding Company, repay certain Express Scripts indebtedness, and cover associated fees and expenses. The notes are issued under an indenture with U.S. Bank National Association and include provisions for interest payments, redemption, and covenants restricting Halfmoon and its subsidiaries. Notably, most of the notes are subject to a special mandatory redemption if the Express Scripts acquisition does not close by a specific date or if Halfmoon decides not to pursue it, with proceeds held in segregated accounts until certain conditions are met. A registration rights agreement is also in place to facilitate the exchange of these notes for registered notes following the acquisition or a related merger.

Key Highlights

  • 1Cigna subsidiary Halfmoon Parent, Inc. completed an offering of $13.25 billion in Senior Notes (both floating and fixed rate) on September 17, 2018.
  • 2Proceeds are earmarked primarily for the pending acquisition of Express Scripts Holding Company, including cash consideration and debt repayment.
  • 3The offering comprises multiple tranches with varying maturities (18 months to 30 years) and interest rate structures (fixed and floating based on LIBOR).
  • 4A significant portion of the notes are subject to a special mandatory redemption clause if the Express Scripts acquisition does not close by September 4, 2019, or if Halfmoon withdraws from the transaction.
  • 5Proceeds from mandatorily redeemable notes are required to be held in segregated collateral accounts to protect noteholders.
  • 6A Registration Rights Agreement was executed, obligating Halfmoon to register the notes for resale or exchange after the acquisition or a related merger, with penalties for non-compliance.
  • 7The notes are offered only to qualified institutional buyers and certain non-U.S. persons, and have not been registered under the Securities Act of 1933.

Frequently Asked Questions

The primary reason Cigna, through its subsidiary Halfmoon Parent, Inc., is issuing these notes is to finance a significant portion of the cash consideration for its pending acquisition of Express Scripts Holding Company. The proceeds will also be used to repay certain indebtedness of Express Scripts and its subsidiaries, and to cover related fees and expenses.

Cigna raised a total of $13,250,000,000 through this offering. This amount is comprised of $1,000,000,000 in 18-Month Floating Rate Notes, $1,750,000,000 in 2-Year Fixed Rate Notes, $1,000,000,000 in 3-Year Floating Rate Notes, $1,250,000,000 in 3-Year Fixed Rate Notes, $700,000,000 in 5-Year Floating Rate Notes, $3,100,000,000 in 5-Year Fixed Rate Notes, $2,200,000,000 in 7-Year Fixed Rate Notes, $3,800,000,000 in 10-Year Fixed Rate Notes, $2,200,000,000 in 20-Year Fixed Rate Notes, and $3,000,000,000 in 30-Year Fixed Rate Notes.

If the acquisition of Express Scripts does not close before September 4, 2019, or if Halfmoon Parent, Inc. decides not to pursue the acquisition, many of the issued notes (excluding the 30-Year Fixed Rate Notes) are subject to a special mandatory redemption. The proceeds from these notes are held in segregated accounts until the acquisition is consummated or the redemption date occurs.

Yes, Cigna has entered into a Registration Rights Agreement. If Cigna fails to file and effect the effectiveness of a registration statement for an exchange offer or a shelf registration statement within specified timeframes after the acquisition or a related merger, the interest rate on the notes will increase. The annual interest rate will increase by 0.25% for the first 90-day period of default and by an additional 0.25% for each subsequent 90-day period, up to a maximum of 1.00% per year.