8-KMaterial AgreementsFinancial Events

CENTENE CORP 8-K Report, Material Agreement (May 7, 2019)

Filed May 7, 2019For Securities:CNC

Summary

Centene Corporation (CNC) has entered into an amended and restated credit agreement, establishing a new $2.0 billion unsecured multi-currency revolving credit facility. This facility, maturing on May 7, 2024, provides significant financial flexibility with sub-limits for letters of credit and swingline loans. The agreement also allows for potential incremental borrowings of up to $500 million or more, subject to maintaining a total debt-to-EBITDA ratio not exceeding 3.50 to 1.00, indicating a capacity for strategic expansion or acquisition funding. The new credit facility is governed by key financial covenants, including a minimum fixed charge coverage ratio and a maximum total debt-to-EBITDA ratio. These covenants, along with customary restrictions on various corporate actions, aim to ensure the company's financial stability. The interest rates on borrowings are tied to various benchmarks like LIBOR or base rates, plus applicable margins that fluctuate based on the company's leverage. This refinancing and credit facility update are crucial for managing Centene's ongoing operational and strategic financial needs.

Key Highlights

  • 1Centene Corporation amended and restated its credit agreement, establishing a $2.0 billion unsecured multi-currency revolving credit facility.
  • 2The new Revolving Credit Facility matures on May 7, 2024.
  • 3The facility includes a $300 million sub-limit for letters of credit and a $200 million sub-limit for swingline loans.
  • 4Centene has the option to incur additional incremental loans up to $500 million (or more based on leverage), potentially supporting future growth.
  • 5Borrowings will bear interest based on LIBOR, EURIBOR, CDOR, BBR, or base rates, plus applicable margins determined by the total debt-to-EBITDA ratio.
  • 6The agreement includes financial covenants such as a minimum fixed charge coverage ratio and a maximum total debt-to-EBITDA ratio of 3.50 to 1.00.
  • 7Customary covenants restrict certain corporate actions including mergers, asset sales, debt incurrence, and restricted payments.

Frequently Asked Questions

This 8-K filing announces that Centene Corporation has entered into an amended and restated credit agreement, which establishes a new $2.0 billion unsecured multi-currency revolving credit facility. This is a significant update to the company's financing arrangements.

The company has access to a $2.0 billion revolving credit facility. It also has sub-limits of $300 million for letters of credit and $200 million for swingline loans. Furthermore, there's an option to increase borrowings by up to $500 million, subject to certain financial conditions, providing substantial financial flexibility.

Centene must maintain a minimum fixed charge coverage ratio and a maximum total debt-to-EBITDA ratio, which should not exceed 3.50 to 1.00. The agreement also contains customary covenants that restrict certain corporate activities like mergers, asset sales, and the incurrence of additional debt.

The Revolving Credit Facility under the new Credit Agreement matures on May 7, 2024, unless extended.