8-KMaterial AgreementsFinancial EventsOther Events+1

CENTENE CORP 8-K Report, Material Agreement (Nov 9, 2016)

Filed November 9, 2016For Securities:CNC

Summary

Centene Corporation (CNC) announced on November 9, 2016, the issuance of $1.2 billion in 4.75% senior notes due 2025. This offering, made through a public offering and governed by an indenture with The Bank of New York Mellon Trust Company, N.A., represents a significant capital raise for the company. The notes are senior unsecured obligations, ranking equally with existing and future unsecured debt, but are effectively subordinated to any secured debt. These notes provide Centene with additional financial flexibility and capital. Investors should note the redemption provisions, which allow Centene to redeem the notes under specific conditions, including a "make-whole" premium before 2020 and at varying premiums thereafter, with full redemption at par from January 2023. The indenture also includes covenants that restrict the company's ability to incur additional debt, pay dividends, make investments, sell assets, and engage in certain other financial activities, which are standard for such debt offerings and aimed at protecting noteholders.

Key Highlights

  • 1Centene Corporation issued $1.2 billion of 4.75% senior notes due 2025.
  • 2The notes were issued in a public offering on November 9, 2016.
  • 3The notes are senior unsecured obligations of the Company.
  • 4Centene has the option to redeem the notes at various prices and times, including a "make-whole" premium before January 15, 2020.
  • 5The indenture includes covenants restricting additional indebtedness, dividend payments, asset sales, and other financial activities.
  • 6The company must offer to repurchase the notes at 101% of principal if a change of control occurs.
  • 7The Bank of New York Mellon Trust Company, N.A. is the trustee for the indenture.

Frequently Asked Questions

The filing does not explicitly state the purpose of the debt issuance. However, typically such offerings are made to raise capital for general corporate purposes, potential acquisitions, refinancing existing debt, or funding operational growth. For investors, this represents Centene securing significant funding for its future endeavors.

The notes carry a fixed interest rate of 4.75% per annum and mature on January 15, 2025. Interest payments are scheduled for January 15 and July 15 of each year, with the first payment on July 15, 2017.

Centene can redeem all or a portion of the notes before maturity. Before January 15, 2020, redemption requires a "make-whole" premium. After January 15, 2020, redemption prices are set at a premium (e.g., 103.563% in early 2020) that decreases over time, with redemption at 100% of the principal amount allowed from January 15, 2023, onwards, plus accrued interest in all cases.

The covenants impose restrictions on Centene, such as limiting its ability to take on more debt, pay dividends, make investments, sell assets, or create certain liens. These are standard provisions designed to protect the noteholders' investment by maintaining the company's financial stability and its ability to repay the debt.