Summary
Centene Corporation (CNC) filed a Form 8-K on September 22, 2006, to report an amendment to its Credit Agreement originally dated September 14, 2004. The primary purpose of this amendment was to increase the total available credit facility from $200 million to $300 million, demonstrating the company's expanded borrowing capacity. This increased liquidity is a positive signal for investors, suggesting the company has greater financial flexibility to pursue growth opportunities, manage operations, or handle unexpected financial needs. The filing also provides details on the terms of the credit agreement, including interest rates tied to LIBOR, specific financial covenants (fixed charge coverage, debt-to-EBITDA, tangible net worth), and an expiration date of September 21, 2011. As of the filing date, Centene had $142.5 million in borrowings and $15.6 million in outstanding letters of credit, confirming compliance with all covenants, which provides comfort regarding the company's current financial health and adherence to its debt obligations.
Key Highlights
- 1Amendment to the existing Credit Agreement dated September 14, 2004, executed on September 22, 2006.
- 2Total credit facility increased from $200 million to $300 million.
- 3Includes a sub-facility for letters of credit up to an aggregate amount of $75 million.
- 4Borrowings bear interest based on LIBOR, Federal Funds Rate, or Prime Rate; currently LIBOR plus 1.25%.
- 5Credit agreement includes financial covenants such as minimum fixed charge coverage, maximum debt-to-EBITDA ratios, and minimum tangible net worth.
- 6The credit agreement expires on September 21, 2011.
- 7As of September 22, 2006, Centene had $142.5 million in borrowings and $15.6 million in outstanding letters of credit and was in compliance with all covenants.