Summary
Centene Corporation (CNC) filed this Form 8-K on November 7, 2012, to report on a significant debt financing event. On November 2, 2012, the company entered into an underwriting agreement to issue $175 million in aggregate principal amount of 5.75% senior notes due 2017. These notes are fungible with and an additional issuance to the company's existing 5.75% senior notes due 2017, increasing the total outstanding amount to $425 million. The net proceeds from this offering are intended for general corporate purposes, with a primary focus on funding statutory capital, which is crucial for Centene's operations in the managed care sector.
Key Highlights
- 1Centene Corporation issued $175 million in 5.75% senior notes due 2017.
- 2The new notes are fungible with and an addition to the existing $250 million of the same notes issued in 2011.
- 3Total aggregate principal amount of 5.75% senior notes due 2017 now stands at $425 million.
- 4Proceeds are designated for general corporate purposes, primarily funding statutory capital.
- 5The offering was conducted through an underwriting agreement with Barclays Capital Inc. and Wells Fargo Securities, LLC.
- 6The notes are senior unsecured obligations, ranking equally with existing senior unsecured debt but subordinated to secured debt.
- 7A change of control provision requires Centene to offer to purchase the notes at 101% of the principal amount.
Frequently Asked Questions
Centene Corporation intends to use the net proceeds from the $175 million senior notes offering for general corporate purposes, with a key focus on funding its statutory capital requirements. Statutory capital is essential for managed care organizations to maintain regulatory compliance and operational stability.
The newly issued 5.75% senior notes due 2017 are fully fungible with and an additional issuance to the $250 million of the same notes issued in May 2011. This increases the total outstanding principal amount of these senior notes to $425 million. The new notes rank equally with existing senior unsecured debt and are subject to the same indenture terms and covenants.
The notes mature on June 1, 2017, and bear interest at 5.75% payable semi-annually. They are senior unsecured obligations. An important investor protection is the change of control provision, which mandates that Centene must offer to purchase the notes at 101% of their principal amount if certain change of control events occur. The indenture also contains covenants that limit the company's ability to incur additional debt, pay dividends, sell assets, and engage in other actions.
Yes, Amendment No. 1 to the Credit Agreement was executed on November 2, 2012. This amendment updated the definition of Senior Notes within the Revolving Credit Facility to accommodate the increased aggregate principal amount of the 5.75% senior notes due 2017, raising the potential limit from $400 million to $425 million.