8-KMaterial AgreementsFinancial EventsExhibits & Filings

CENTENE CORP 8-K Report, Material Agreement (May 22, 2013)

Filed May 22, 2013For Securities:CNC

Summary

Centene Corporation (CNC) announced on May 22, 2013, that it has entered into a new, larger, and more favorable unsecured Revolving Credit Agreement. This agreement significantly enhances the company's financial flexibility by increasing its borrowing capacity to $500 million, up from $350 million, and raising the expansion provision to $100 million. The new credit facility also offers improved terms with a 100 basis point reduction in interest rates across all tiers and an extended maturity date to June 1, 2018, providing a longer runway for its financial planning. This refinancing and increased credit line signal Centene's confidence in its ongoing operations and growth trajectory. The termination of the previous, smaller credit agreement on the same day, with no outstanding borrowings, further underscores a strategic move to leverage more robust financing. Investors should view this as a positive development, demonstrating the company's ability to secure favorable credit terms and bolster its liquidity to support future strategic initiatives and operational needs.

Key Highlights

  • 1Centene Corporation entered into a new unsecured Revolving Credit Agreement on May 21, 2013.
  • 2The new agreement increases the total borrowing capacity from $350 million to $500 million.
  • 3The expansion provision under the credit facility has been increased from $50 million to $100 million.
  • 4Interest rates for borrowings have been decreased by 100 basis points across each tier.
  • 5The maturity date of the credit facility has been extended from January 2016 to June 1, 2018.
  • 6The existing $350 million credit line with Barclays Bank PLC was terminated concurrently, with no outstanding borrowings.
  • 7The new agreement includes financial covenants such as minimum fixed charge coverage ratios, debt-to-EBITDA ratios, and tangible net worth requirements.

Frequently Asked Questions

The new agreement significantly enhances Centene's financial flexibility by increasing its borrowing capacity to $500 million, extending its maturity date to 2018, and reducing interest costs. This provides greater liquidity and financial resources to support the company's growth and operational needs.

No, as of May 21, 2013, there were no borrowings outstanding under the previous $350 million revolving credit agreement when it was terminated.

The new agreement reduces interest rates by 100 basis points across all tiers and extends the maturity date to June 1, 2018. Borrowings will bear interest based on LIBOR rates, the Federal Funds Rate, or the Prime Rate.

Yes, the agreement contains financial covenants, including requirements for minimum fixed charge coverage ratios, minimum debt-to-EBITDA ratios, and minimum tangible net worth. There are also non-financial covenants. The agreement also has a provision to mature 90 days prior to the maturity of the Company's 5.75% Senior Notes due 2017 under certain circumstances.