8-KMaterial AgreementsOther EventsExhibits & Filings

CENTENE CORP 8-K Report, Material Agreement (Nov 15, 2019)

Filed November 15, 2019For Securities:CNC

Summary

Centene Corporation (CNC) filed an 8-K on November 15, 2019, detailing significant financing and debt-related activities in preparation for its acquisition of WellCare Health Plans, Inc. The company amended its existing credit agreement to temporarily exclude debt incurred for the WellCare acquisition from certain financial covenant calculations, providing flexibility during the merger process. This amendment is effective until the earlier of the merger's consummation or September 26, 2020. Furthermore, Centene announced the successful solicitation of consents for amendments to WellCare's senior notes indentures. These amendments will significantly alter the terms of WellCare's existing debt, including the elimination of SEC reporting obligations for WellCare, removal of most restrictive covenants, and removal of mandatory repurchase obligations upon a change of control, such as the proposed merger. These changes are contingent upon the settlement of Centene's exchange offers for these notes, which are expected to occur just before the merger closes. The company also announced a substantial offering of new senior notes totaling $7 billion to fund the cash portion of the WellCare acquisition and for general corporate purposes.

Key Highlights

  • 1Amendment to existing credit agreement to provide covenant relief related to WellCare acquisition debt until September 26, 2020, or merger completion.
  • 2Received requisite consents to amend WellCare's senior notes indentures, significantly altering debt terms.
  • 3Key indenture amendments include elimination of WellCare's SEC reporting obligations and removal of restrictive covenants.
  • 4The obligation to repurchase WellCare notes upon a change of control (like the merger) has been eliminated.
  • 5Centene is offering up to $1.95 billion in new notes as part of an exchange offer for existing WellCare notes.
  • 6Announced a $7 billion offering of new senior notes (including 5.375% notes due 2026, 2027 notes, and 2029 notes) to finance the WellCare merger and for general corporate purposes.
  • 7Filed updated unaudited pro forma condensed combined financial information reflecting the estimated effects of the merger and related financing.

Frequently Asked Questions

The amendment to Centene's existing credit agreement temporarily excludes debt incurred to finance the acquisition of WellCare Health Plans, Inc. from the calculation of certain financial covenants. This provides Centene with greater financial flexibility during the period leading up to the merger's completion.

The amendments to WellCare's indentures will eliminate WellCare's obligation to file SEC reports, remove most restrictive covenants, and remove the requirement to offer to repurchase the notes upon a change of control event (such as the merger). These changes become effective upon the settlement of Centene's exchange offer for these notes.

Centene is financing the acquisition through a combination of an exchange offer for WellCare's existing notes and a significant new debt offering. They are offering up to $1.95 billion in new notes via an exchange offer for WellCare notes and have announced a $7 billion offering of new senior notes to fund the cash portion of the merger consideration and related expenses, with remaining proceeds for general corporate purposes.

The credit agreement amendment is effective immediately and lasts until the earlier of the merger's consummation or September 26, 2020. The changes to the WellCare indentures will become operative upon the settlement of Centene's exchange offers, which is expected to occur immediately prior to the closing of the WellCare merger.