8-KMaterial AgreementsFinancial EventsExhibits & Filings

Cencora, Inc. 8-K Report, Material Agreement (Oct 27, 2022)

Filed October 27, 2022For Securities:COR

Summary

Cencora, Inc. (COR), formerly AmerisourceBergen Corporation, filed an 8-K on October 27, 2022, to report the amendment and restatement of its senior unsecured multi-currency revolving credit facility. The key change is the extension of the facility's maturity date to October 27, 2027. Additionally, the agreement has been updated to transition from the LIBOR interest rate benchmark to Term SOFR and other alternative rates, which is a significant move in response to market-wide benchmark reforms. This amendment provides Cencora with continued access to a substantial credit line for general corporate purposes and strategic initiatives. The updated terms reflect current market practices regarding interest rate benchmarks and provide borrowing flexibility with predefined rates and facility fees tied to the company's credit ratings. The facility also includes standard covenants and allows for the issuance of letters of credit up to $75 million, which reduce availability under the revolving credit line.

Key Highlights

  • 1Extended Revolving Credit Facility Maturity: The credit facility's maturity date has been extended by five years to October 27, 2027.
  • 2Transition to Term SOFR: The company has transitioned from LIBOR to Term SOFR and other alternative reference rates, aligning with industry-wide benchmark reform.
  • 3Continued Access to Liquidity: The amendment ensures continued access to the multi-currency revolving credit facility for general corporate purposes.
  • 4Interest Rate and Fee Structure: Borrowing costs are based on credit ratings, ranging from 80.5 to 122.5 basis points over alternative rates, with annual facility fees between 7 and 15 basis points.
  • 5Letter of Credit Availability: The company can issue letters of credit up to $75 million, which will reduce the available borrowing capacity.
  • 6Standard Covenants and Flexibility: The agreement includes standard affirmative and negative covenants, while also allowing for prepayments and commitment reductions.
  • 7Commitment by Key Lenders: JPMorgan Chase Bank, N.A. continues to serve as the administrative agent, with Bank of America, N.A. and Wells Fargo Securities, LLC (among others) involved in the facility.

Frequently Asked Questions

The main purpose of this 8-K filing is to report the amendment and restatement of Cencora's (then AmerisourceBergen) senior unsecured multi-currency revolving credit facility. Key changes include extending the maturity date and transitioning the interest rate benchmark from LIBOR to Term SOFR.

The transition to Term SOFR is a proactive measure to align with global financial market shifts away from LIBOR. While the specifics of interest calculations have changed, the company retains flexibility in borrowing costs based on its credit ratings and can prepay without penalty, ensuring operational continuity and financial management.

The filing does not explicitly state the total commitment amount for the revolving credit facility, but it indicates that the company has the right to obtain letters of credit up to a maximum of $75 million, which would reduce the available borrowing capacity under the facility.

Extending the maturity date to October 27, 2027, provides Cencora with long-term financial flexibility and stability. It ensures continued access to a significant source of funding for general corporate purposes and strategic initiatives for the next five years, reducing near-term refinancing risk.