8-KMaterial AgreementsFinancial EventsOther Events+1

CENTENE CORP 8-K Report, Material Agreement (May 27, 2011)

Filed May 27, 2011For Securities:CNC

Summary

Centene Corporation (CNC) filed an 8-K on May 27, 2011, detailing the issuance of $250 million in aggregate principal amount of 5.75% Senior Notes due 2017. The primary use of proceeds from this offering was to refinance existing debt, specifically redeeming $175 million of 7 1/4% Senior Notes due 2014, including associated call premiums, and repaying approximately $50 million of borrowings under its revolving credit facility. The remaining funds are allocated for general corporate purposes. This refinancing activity demonstrates Centene's proactive approach to managing its capital structure by lowering its interest expense and extending its debt maturity profile. The new notes are senior unsecured obligations, ranking equally with existing senior unsecured debt but subordinated to secured debt. The indenture includes standard covenants designed to protect noteholders, restricting actions such as incurring additional debt, making restricted payments, or selling significant assets, though these are subject to specified exceptions.

Key Highlights

  • 1Centene Corporation issued $250 million in 5.75% Senior Notes due 2017.
  • 2Proceeds were used to redeem $175 million of 7 1/4% Senior Notes due 2014, including call premiums.
  • 3Approximately $50 million of revolving credit facility borrowings were repaid.
  • 4The remainder of the proceeds will support general corporate purposes.
  • 5The new notes mature on June 1, 2017, with interest payable semi-annually.
  • 6The notes are senior unsecured obligations, ranking pari passu with other senior unsecured debt.
  • 7The indenture contains covenants that limit company actions related to debt, dividends, asset sales, and mergers, among others.

Frequently Asked Questions

The primary purpose was to refinance existing debt. Centene used the proceeds to redeem higher-interest notes (7 1/4% due 2014) and reduce borrowings under its credit facility, likely to lower interest costs and optimize its debt maturity structure.

Centene raised $250 million in aggregate principal amount. The notes bear a fixed interest rate of 5.75% and mature on June 1, 2017. Interest is payable on June 1 and December 1 each year.

This issuance effectively replaces older, higher-cost debt with newer, lower-cost debt and extends the maturity profile. It also reduces leverage on the revolving credit facility. The notes are senior unsecured, meaning they are subordinate to any secured debt but rank equally with other unsecured senior debt.

Yes, the indenture includes covenants that restrict Centene and its subsidiaries from taking certain actions, such as incurring more debt, paying dividends or making other restricted payments, selling significant assets, or engaging in mergers and consolidations, without meeting specific conditions or exceptions outlined in the indenture.