8-KMaterial AgreementsFinancial EventsOther Events+1

Cencora, Inc. 8-K Report, Material Agreement (Feb 20, 2015)

Filed February 20, 2015For Securities:COR

Summary

On February 20, 2015, AmerisourceBergen Corporation (now Cencora, Inc.) completed the issuance of $1 billion in aggregate principal amount of senior notes. This offering was divided into two tranches: $500 million of 3.250% Senior Notes due March 1, 2025, and $500 million of 4.250% Senior Notes due March 1, 2045. These notes are unsecured and unsubordinated obligations of the Company, ranking equally with existing and future unsecured and unsubordinated debt but are structurally subordinated to all liabilities of its subsidiaries. The issuance of these notes is directly linked to the company's pending acquisition of MWI Veterinary Supply, Inc. ("MWI"). Notably, the company is obligated to redeem these notes in whole at 101% of their principal amount if the MWI acquisition is not completed by May 15, 2015, or if the acquisition agreement is terminated before then without consummation. This structure highlights the strategic importance of the MWI acquisition to the company's financing and operational plans.

Key Highlights

  • 1AmerisourceBergen (COR) issued $1 billion in aggregate principal amount of Senior Notes.
  • 2The issuance includes $500 million of 3.250% Senior Notes due 2025 and $500 million of 4.250% Senior Notes due 2045.
  • 3These notes are unsecured and rank equally with other unsecured, unsubordinated debt, but are structurally subordinated to subsidiary debt.
  • 4A key event of default/redemption trigger is the failure to complete the acquisition of MWI Veterinary Supply, Inc. by May 15, 2015, or termination of the acquisition agreement.
  • 5In the event of a change of control, the company must offer to repurchase the notes at 101% of the principal amount.
  • 6The company may redeem the notes prior to maturity under specified 'make-whole' provisions or at par after a certain date.
  • 7The filing incorporates by reference the relevant Indentures and an opinion from Morgan, Lewis & Bockius LLP regarding the notes' validity.

Frequently Asked Questions

This 8-K filing announces AmerisourceBergen's entry into a material definitive agreement concerning the issuance of $1 billion in aggregate principal amount of Senior Notes and the creation of a direct financial obligation related to these notes. It also details the terms and conditions of these notes and their connection to the pending acquisition of MWI Veterinary Supply, Inc.

The company issued $500 million of 3.250% Senior Notes due March 1, 2025, and $500 million of 4.250% Senior Notes due March 1, 2045. These notes are unsecured and unsubordinated. They bear semiannual interest payments starting September 1, 2015. The company has the option to redeem the notes under specific conditions, including a 'make-whole' price or at par value on or after certain dates.

The acquisition of MWI Veterinary Supply, Inc. is a critical contingency for these notes. If the acquisition is not completed by May 15, 2015, or if the acquisition agreement is terminated prior to that date without consummation, AmerisourceBergen is required to redeem the entire principal amount of these notes at 101% of their face value. This creates a direct financial obligation for the company that is contingent on the successful closing of the MWI deal.

Structural subordination means that while these notes rank equally with other unsecured and unsubordinated debt of AmerisourceBergen at the parent company level, they are effectively lower in priority than any debt or liabilities at the subsidiary level. In the event of bankruptcy or liquidation of a subsidiary, creditors of that subsidiary would have a claim on its assets before any proceeds could be remitted to the parent company to service its debt, including these senior notes.