8-KMaterial AgreementsFinancial EventsExhibits & Filings

CENTENE CORP 8-K Report, Material Agreement (Aug 12, 2021)

Filed August 12, 2021For Securities:CNC

Summary

Centene Corporation (CNC) announced on August 12, 2021, the completion of a public offering of $1.8 billion in senior notes. This issuance includes $500 million of additional 2.450% Senior Notes due 2028 and $1.3 billion of new 2.625% Senior Notes due 2031. The primary purpose of this offering is to refinance existing debt, specifically to redeem all outstanding 5.375% Senior Notes due 2026 from both Centene Corporation and its subsidiary WellCare Health Plans, Inc. The company intends to use the net proceeds, along with funds from term loans and cash on hand, to cover the principal, premiums, accrued interest, and related costs for the debt redemption. This strategic move aims to lower Centene's overall interest expense by replacing higher-coupon debt with new, lower-interest notes, thereby improving its financial efficiency and potentially enhancing profitability. Pending the debt redemption, the proceeds may be temporarily used for general corporate purposes.

Key Highlights

  • 1Centene Corporation completed a $1.8 billion senior notes offering on August 12, 2021.
  • 2The offering consists of $500 million in additional 2.450% Senior Notes due 2028 and $1.3 billion in 2.625% Senior Notes due 2031.
  • 3The net proceeds will be used to redeem all outstanding 5.375% Senior Notes due 2026 of both Centene Corporation and WellCare Health Plans, Inc.
  • 4This debt refinancing is expected to reduce the company's interest expense.
  • 5The new notes are senior unsecured obligations, ranking equally with existing senior indebtedness and senior to subordinated debt.
  • 6Both new note series include provisions for redemption at the company's option and potential mandatory repurchase in the event of a change of control.
  • 7The offering was made under Centene's effective automatic shelf registration statement filed with the SEC.

Frequently Asked Questions

The primary goal of this offering is to refinance existing debt. Centene Corporation plans to use the proceeds to redeem all of its outstanding 5.375% Senior Notes due 2026 and those of its subsidiary, WellCare Health Plans, Inc., which carry a higher interest rate.

By issuing new notes with lower interest rates (2.450% and 2.625%) to replace older notes with a higher rate (5.375%), Centene aims to reduce its overall interest expense. This debt restructuring should improve the company's financial efficiency and potentially boost its net income.

The new notes can be redeemed by Centene at its option, with specific redemption prices and dates outlined in the respective indentures. Both series also contain provisions requiring Centene to make an offer to repurchase the notes at 101% of the principal amount if a specified change of control event occurs.

No, the new senior notes are designated as senior unsecured obligations. This means they rank equally with Centene's other senior unsecured debt but are effectively junior to any secured indebtedness to the extent of the value of the collateral backing such secured debt.