8-KMaterial AgreementsFinancial EventsOther Events+1

CENTENE CORP 8-K Report, Material Agreement (Jun 14, 2016)

Filed June 14, 2016For Securities:CNC

Summary

Centene Corporation (CNC) filed an 8-K on June 14, 2016, reporting the entry into a material definitive agreement for the issuance of $500 million in aggregate principal amount of 4.75% senior notes due 2022. These notes are fungible with and an additional issuance of existing notes due the same year, bringing the total outstanding of this series to $1 billion. The primary purpose of this offering is to repay outstanding amounts under the company's revolving credit facility. This transaction signifies Centene's proactive approach to managing its debt obligations and financing its operations. The use of proceeds to reduce credit facility borrowings suggests a strategy to potentially lower interest expenses or enhance financial flexibility. Investors should note the details of the senior notes, including their interest rate, maturity date, redemption provisions, and covenants, which are standard for this type of debt instrument and provide insight into the company's financial structure and obligations.

Key Highlights

  • 1Centene Corporation issued an additional $500 million in aggregate principal amount of its 4.75% senior notes due 2022.
  • 2The new notes are fully fungible with, rank equally with, and form a single series with previously issued 4.75% senior notes due 2022.
  • 3The total principal amount of 4.75% senior notes due 2022 outstanding after this issuance is $1 billion.
  • 4Net proceeds from the offering are intended to be used to repay outstanding amounts under Centene's revolving credit facility.
  • 5The notes are senior unsecured obligations, ranking equally with existing and future senior unsecured indebtedness.
  • 6The indenture governing the notes includes customary covenants that limit the company's and its subsidiaries' ability to incur additional debt, pay dividends, sell assets, and engage in other restricted activities.
  • 7The notes have specific redemption provisions, including a make-whole premium before May 15, 2019, and stepped redemption prices thereafter, as well as a change of control provision requiring a purchase offer at 101% of the principal amount.

Frequently Asked Questions

The primary purpose of the offering is to use the net proceeds to repay outstanding amounts under Centene's revolving credit facility. This suggests a strategy to manage short-term debt and potentially optimize the company's capital structure.

These $500 million notes are an additional issuance of the 4.75% senior notes due 2022. They are fully fungible with, rank equally with, and form a single series with the previously issued notes of the same series, increasing the total outstanding amount of these notes to $1 billion.

The notes bear a 4.75% interest rate and mature on May 15, 2022. Interest is payable semi-annually on May 15 and November 15, beginning November 15, 2016. They are senior unsecured obligations.

Yes, the indenture governing these notes includes customary covenants that limit Centene and its restricted subsidiaries from, among other things, incurring additional indebtedness, paying dividends or making other distributions, making restricted payments, selling assets, and creating certain liens. These restrictions are subject to specified exceptions and qualifications.