8-KMaterial AgreementsFinancial EventsExhibits & Filings

Cencora, Inc. 8-K Report, Material Agreement (Jun 23, 2016)

Filed June 23, 2016For Securities:COR

Summary

Cencora, Inc. (formerly AmerisourceBergen Corporation) filed an 8-K on June 23, 2016, reporting amendments to its Receivables Purchase Agreement and Receivables Sale Agreement. The key action was the Tenth Amendment to the Receivables Purchase Agreement, which increased the available securitization facility by $500 million, from $950 million to $1,450 million. This expansion provides Cencora with enhanced liquidity to support its ongoing business operations, particularly its pharmaceutical distribution and related services. Furthermore, the company utilized these amended securitization facilities to make a significant $500 million prepayment on its Term Loan Credit Agreement. This strategic move suggests a focus on optimizing its capital structure and potentially reducing interest expenses. Investors should note the increased borrowing capacity and the proactive debt management as positive indicators of financial flexibility.

Key Highlights

  • 1Increased securitization facility by $500 million, bringing the total to $1,450 million.
  • 2Added Advantage Asset Securitization Corp. as an uncommitted purchaser to the Receivables Purchase Agreement.
  • 3Designated Mizuho Bank, Ltd. as Advantage Asset's purchaser agent and assigned Working Capital's commitment to Mizuho.
  • 4Conformed certain covenants, definitions, and amortization events to align with the company's multi-currency revolving credit facility.
  • 5Entered into a Fifth Amendment to the Receivables Sale Agreement, also aligning terms with the revolving credit facility.
  • 6Utilized the expanded securitization facility to prepay $500 million on the Term Loan Credit Agreement.
  • 7The securitization facility provides additional liquidity for ongoing business needs, based on accounts receivables from pharmaceutical sales and related services.

Frequently Asked Questions

The primary purpose of the amendments is to increase Cencora's liquidity and funding capacity. The Receivables Purchase Agreement was amended to increase the facility size by $500 million, and these amendments also standardize terms with the company's revolving credit facility, enhancing financial flexibility for ongoing business operations.

The increased facility provides Cencora with an additional $500 million in available funding. This enhanced liquidity supports the company's working capital needs, especially in its core business of distributing pharmaceuticals and related services, allowing for greater financial maneuverability.

The $500 million prepayment demonstrates Cencora's proactive approach to debt management and capital structure optimization. By using funds from the expanded securitization facility, the company is effectively reducing its outstanding debt, which could lead to lower interest expenses and improved financial leverage.

Advantage Asset Securitization Corp. has joined the Receivables Purchase Agreement as an uncommitted purchaser. Mizuho Bank, Ltd. has been designated as Advantage Asset's purchaser agent and has assumed 100% of Working Capital Management Co., LP's commitment, facilitating the increased participation in the securitization facility.