Summary
Centene Corporation (CNC) announced on September 11, 2019, a significant amendment and restatement of its credit agreement. This update introduces a new $1.45 billion unsecured delayed-draw term loan facility, supplementing its existing $2.0 billion revolving credit facility. The proceeds from this new term loan are earmarked for redeeming its 5.625% Senior Notes due 2021, totaling approximately $1.4 billion, along with associated fees and general corporate purposes. The company has also issued a notice to redeem these notes in full on October 11, 2019, at a redemption price of 101.4063% of the principal amount plus accrued interest. This strategic move to refinance existing debt demonstrates Centene's proactive approach to managing its capital structure. The establishment of a new credit facility and the redemption of outstanding notes indicate potential optimization of borrowing costs and maturities. Investors should monitor the impact of this new debt on the company's leverage ratios and interest expense, especially given the inclusion of financial covenants in the amended credit agreement, such as a minimum fixed charge coverage ratio and a maximum total debt-to-EBITDA ratio.
Key Highlights
- 1Centene entered into an amended and restated credit agreement on September 11, 2019.
- 2A new $1.45 billion unsecured delayed-draw term loan facility has been added.
- 3The existing $2.0 billion unsecured multi-currency revolving credit facility remains in place.
- 4Proceeds from the term loan will be used to redeem the 5.625% Senior Notes due 2021, with an aggregate principal amount of $1.4 billion.
- 5Centene has issued a notice to redeem all outstanding Senior Notes due 2021 on October 11, 2019, at a premium.
- 6The amended credit agreement includes financial covenants such as minimum fixed charge coverage ratio and maximum total debt-to-EBITDA ratio.
- 7The new Term Loan Facility matures on September 11, 2022.