Summary
Centene Corporation (CNC) announced on January 31, 2011, the execution of a new five-year, $350 million unsecured revolving credit agreement. This new facility, with Barclays Bank PLC acting as the administrative agent, replaces their previous $300 million credit line with Bank of America. The new agreement provides Centene with increased financial flexibility and access to capital, which is crucial for its operations and potential growth initiatives. The terms of the new agreement include financial covenants related to fixed charge coverage, debt-to-EBITDA, and tangible net worth, standard for corporate credit facilities.
Key Highlights
- 1Centene executed a new 5-year, $350 million unsecured revolving credit agreement on January 31, 2011.
- 2The new credit facility increases the company's borrowing capacity from $300 million to $350 million.
- 3Barclays Bank PLC is the administrative agent and joint lead arranger for the new agreement.
- 4The agreement replaces a previous $300 million revolving credit facility with Bank of America.
- 5Interest rates are based on LIBOR, Federal Funds Rate, or Prime Rate.
- 6The agreement includes financial covenants such as minimum fixed charge coverage ratios, debt-to-EBITDA ratios, and minimum tangible net worth.
- 7As of January 31, 2011, $61.3 million was drawn under the new agreement.
Frequently Asked Questions
The primary purpose of this 8-K filing is to inform investors about Centene Corporation entering into a new, material definitive agreement, specifically a new revolving credit facility, and the termination of an existing one.
The new credit agreement increases Centene's access to capital by $50 million, providing greater financial flexibility for operational needs, potential acquisitions, or other strategic initiatives. It also modernizes the company's credit facilities.
Yes, the agreement includes financial covenants that Centene must adhere to, such as maintaining minimum fixed charge coverage ratios, debt-to-EBITDA ratios, and minimum tangible net worth. Failure to meet these covenants could lead to a default.
The previous arrangement was a $300 million revolving line of credit facility with Bank of America, dated September 14, 2004. It was terminated in connection with entering into the new, larger credit agreement, likely to consolidate and enhance Centene's credit facilities.