8-KMaterial AgreementsFinancial Events

CENTENE CORP 8-K Report, Material Agreement (Sep 9, 2005)

Filed September 9, 2005For Securities:CNC

Summary

Centene Corporation (CNC) filed an 8-K on September 9, 2005, reporting a material amendment to its Revolving Credit Agreement. The primary impact for investors is the significant increase in the company's available credit facility, which was doubled from $100 million to $200 million. This enhanced borrowing capacity, which includes a sub-facility for letters of credit, provides Centene with greater financial flexibility to pursue strategic initiatives, manage working capital, or address unforeseen needs. Furthermore, the amendment removed a prior security interest in the company's subsidiaries' common and membership stock, converting the credit facility into an unsecured arrangement. This change could indicate increased confidence from lenders in Centene's financial health and prospects, as well as potentially simplifying the company's capital structure. The report also confirms Centene was in compliance with all covenants under the agreement as of the filing date, with $75 million in borrowings and $15 million in outstanding letters of credit.

Key Highlights

  • 1Centene Corporation amended its Revolving Credit Agreement on September 9, 2005.
  • 2The total amount available under the credit facility was increased from $100 million to $200 million.
  • 3A sub-facility for letters of credit up to $50 million was included.
  • 4The credit agreement was converted from a secured to an unsecured facility.
  • 5Borrowings bear interest based on LIBOR plus 1.25% under the current capital structure.
  • 6The agreement includes financial covenants such as minimum fixed charge coverage, debt-to-EBITDA ratios, and tangible net worth.
  • 7The credit agreement is set to expire on September 9, 2010.

Frequently Asked Questions

The main change is the doubling of the revolving credit facility's total available amount from $100 million to $200 million. Additionally, the credit agreement is now an unsecured facility, as the prior security interest in the company's subsidiaries' stock was released.

The increased credit facility provides Centene with greater financial flexibility. This enhanced borrowing capacity can be used to fund operations, working capital needs, potential acquisitions, or to manage any unexpected financial demands, thereby supporting the company's growth and stability.

Centene must comply with financial covenants including maintaining minimum fixed charge coverage ratios, minimum debt-to-EBITDA ratios, and a minimum tangible net worth. These covenants are designed to ensure the company remains financially sound and capable of repaying its debt.

As of September 9, 2005, Centene had $75.0 million in borrowings outstanding and $15.0 million in letters of credit outstanding under the credit agreement.