8-KMaterial AgreementsFinancial EventsRegulation FD+2

Cencora, Inc. 8-K Report, Material Agreement (May 22, 2014)

Filed May 22, 2014For Securities:COR

Summary

AmerisourceBergen Corporation (now Cencora, Inc.) filed an 8-K on May 22, 2014, to report the successful completion of a significant senior note offering totaling $1.1 billion. This offering consisted of $600 million in 1.150% Senior Notes due 2017 and $500 million in 3.400% Senior Notes due 2024. The proceeds from this offering are intended to be used, in part, to redeem the Company's outstanding 5.875% Senior Notes due 2015, which had a principal amount of $500 million. This strategic refinancing demonstrates active liability management by the company, aiming to extend its debt maturity profile and potentially lower its overall interest expense. The new notes are unsecured and rank equally with existing unsecured and unsubordinated debt, but are structurally subordinated to subsidiary debt. Covenants within the indentures place limitations on liens, sale and leaseback transactions, and major corporate restructurings, providing some protection to noteholders while also indicating management's strategic flexibility. The accompanying news release confirms the completion of the offering and the intention to redeem the 2015 notes.

Key Highlights

  • 1Completed a Senior Note Offering of $1.1 billion, comprising $600 million of 1.150% Senior Notes due 2017 and $500 million of 3.400% Senior Notes due 2024.
  • 2Intends to redeem all outstanding $500 million aggregate principal amount of its 5.875% Senior Notes due 2015.
  • 3The new notes are unsecured and unsubordinated, ranking pari passu with other existing unsecured and unsubordinated indebtedness.
  • 4Notes are structurally subordinated to all indebtedness and liabilities of the Company's subsidiaries.
  • 5Indentures include covenants restricting the creation of liens, sale and leaseback transactions, and mergers or consolidations.
  • 6A change of control event triggers an offer to purchase the notes at 101% of the principal amount.
  • 7The company's legal counsel, Morgan, Lewis & Bockius LLP, provided a legal opinion on the validity of the Notes.

Frequently Asked Questions

The primary purpose of this Form 8-K filing was to report the material definitive agreement related to the company's completion of a $1.1 billion senior note offering and its intention to redeem its outstanding 2015 Senior Notes.

AmerisourceBergen issued new, lower-interest notes (1.150% and 3.400%) with longer maturities (2017 and 2024) and is redeeming its higher-interest notes (5.875%) due in 2015. This indicates a refinancing effort to potentially reduce interest expense and extend debt maturities.

The indentures governing the new notes include covenants that limit the company's ability to create liens, enter into sale and leaseback transactions, and merge or consolidate with other entities, among other restrictions. These are standard protective measures for bondholders.

AmerisourceBergen announced its intention to redeem all $500 million of its outstanding 5.875% Senior Notes due 2015 on June 23, 2014. This redemption is funded by the proceeds from the new senior note offering.