8-KMaterial AgreementsFinancial EventsRegulation FD+2

Cencora, Inc. 8-K Report, Material Agreement (Apr 1, 2021)

Filed April 1, 2021For Securities:COR

Summary

Cencora, Inc. (formerly AmerisourceBergen Corporation) filed an 8-K on April 1, 2021, to report on the closing of a significant debt offering and the termination of bridge financing. The company successfully issued $1.525 billion in 0.737% Senior Notes due 2023 and $1.0 billion in 2.700% Senior Notes due 2031, totaling $2.525 billion. These proceeds, along with the entry into a $1.0 billion Term Credit Agreement, allowed the company to terminate its previously secured $3.025 billion in bridge financing commitments. This action is a key step in financing the company's previously announced acquisition of Walgreens Boots Alliance, Inc.'s Alliance Healthcare businesses. The new notes are unsecured and unsubordinated obligations of the company, ranking equally with existing unsecured and unsubordinated debt, but are structurally subordinated to subsidiary indebtedness. The filing also outlines terms related to redemption, change of control provisions, and events of default, providing investors with transparency on the company's financing structure and potential liabilities associated with the acquisition.

Key Highlights

  • 1Completion of offering for $1.525 billion of 0.737% Senior Notes due March 15, 2023.
  • 2Completion of offering for $1.0 billion of 2.700% Senior Notes due March 15, 2031.
  • 3Total aggregate principal amount of Notes issued: $2.525 billion.
  • 4Termination of $3.025 billion in bridge financing commitments due to the Notes issuance and entry into a $1.0 billion Term Credit Agreement.
  • 5The Notes are unsecured and unsubordinated but structurally subordinated to subsidiary debt.
  • 6Indentures include covenants limiting liens, sale and leaseback transactions, and mergers/consolidations.
  • 7Change of control event triggers an offer to purchase Notes at 101% of principal amount.

Frequently Asked Questions

The primary purpose of issuing the 0.737% Senior Notes due 2023 and the 2.700% Senior Notes due 2031 was to finance the company's previously announced acquisition of Walgreens Boots Alliance, Inc.'s Alliance Healthcare businesses. The proceeds, along with a new Term Credit Agreement, allowed the company to terminate its prior bridge financing.

The notes are unsecured and rank equally with other unsecured and unsubordinated debt of Cencora, Inc. However, they are structurally subordinated to the debt and liabilities of the company's subsidiaries. The indentures also contain covenants that restrict the company's ability to create liens, engage in sale and leaseback transactions, and merge or consolidate. A change of control event would require the company to offer to repurchase the notes at 101% of their principal amount.

This offering replaces short-term bridge financing with longer-term debt, providing greater financial stability and flexibility for the acquisition. By issuing $2.525 billion in notes and securing a $1.0 billion term loan, the company was able to terminate its $3.025 billion bridge financing, demonstrating a strategic shift in its capital structure to fund its growth initiatives.

The termination of the $3.025 billion bridge financing is significant because it removes a potentially more expensive and short-term financing obligation. It indicates that the company has successfully secured the necessary long-term capital through the issuance of senior notes and the new term credit agreement, reducing immediate financial pressure and uncertainty related to the acquisition funding.