8-KMaterial AgreementsFinancial EventsExhibits & Filings

Cencora, Inc. 8-K Report, Material Agreement (Nov 6, 2018)

Filed November 6, 2018For Securities:COR

Summary

Cencora, Inc. (formerly AmerisourceBergen Corporation) filed an 8-K on November 5, 2018, detailing significant updates to its financing arrangements. The most impactful event is the Seventh Amendment and Restatement of its Multi-Currency Revolving Credit Facility, which extends the maturity date to October 31, 2023, and increases its borrowing capacity to $1.4 billion. This amendment also introduces more flexibility regarding indebtedness of foreign subsidiaries, a key consideration for a global pharmaceutical wholesale and distribution company. Additionally, the company refinanced its 2015 Term Loans through a new Term Credit Agreement totaling $400 million, which was used to pay off existing obligations. This refinancing appears to offer a reduced interest rate, improving the company's cost of debt. The company also amended its Receivables Purchase Agreement, extending its termination date to October 29, 2021, and aligning certain covenants with its primary credit facility. These actions collectively enhance Cencora's financial flexibility, extend its debt maturities, and potentially reduce its borrowing costs, providing a more robust financial foundation for its ongoing operations and strategic initiatives.

Key Highlights

  • 1Extended the maturity date of the $1.4 billion Multi-Currency Revolving Credit Facility to October 31, 2023.
  • 2Refinanced existing 2015 Term Loans with a new $400 million Term Credit Agreement, likely securing a lower interest rate.
  • 3Modified covenants in the revolving credit facility to allow for greater flexibility with foreign subsidiary indebtedness.
  • 4Extended the termination date of the Receivables Purchase Agreement to October 29, 2021.
  • 5The company has the ability to obtain letters of credit up to $75 million under the revolving credit facility.
  • 6Interest rates on borrowings are variable, based on the company's public debt ratings and applicable benchmark rates (LIBOR, CDOR, etc.).
  • 7The company can prepay borrowings under the revolving credit facility at any time without premium or penalty, subject to minimum thresholds.

Frequently Asked Questions

Extending the maturity date of the Multi-Currency Revolving Credit Facility to October 31, 2023, provides Cencora with greater financial certainty and stability over a longer period. It reduces the immediate need to secure new financing and ensures continued access to a significant source of liquidity for general corporate purposes, allowing the company to focus on its operational and strategic goals without immediate refinancing concerns.

Modifying covenants to allow for indebtedness of foreign subsidiaries, subject to certain limitations, offers Cencora increased operational and financial flexibility. This is particularly beneficial for a global company like Cencora, as it can potentially optimize its capital structure and funding strategies across different international markets more effectively, without being overly constrained by its primary credit facility.

The new $400 million Term Credit Agreement was entered into to refinance and pay off the company's existing 2015 Term Loans. The filing indicates that the terms are substantially similar but with a reduced interest rate. This suggests that Cencora was able to secure more favorable borrowing terms, which would lead to lower interest expenses and improved profitability.

The amendment to the Receivables Purchase Agreement extends its termination date to October 2021 and aligns its covenants with the main credit facility. This agreement allows Cencora's subsidiaries to sell their accounts receivables to a special purpose entity, providing an additional source of liquidity. Extending its term and harmonizing covenants ensures this facility remains a reliable source of funding and integrates smoothly with the company's overall financing strategy.