Summary
CVS Health Corporation (CVS) announced the closing of its acquisition of Oak Street Health, Inc. on May 2, 2023. The company financed a portion of this acquisition through a new $5.0 billion, 364-day unsecured term loan facility, with the initial $5.0 billion advanced concurrently with the merger's completion. This report details the entry into the material definitive agreement for the term loan and confirms the consummation of the Oak Street Health merger. In connection with the acquisition, CVS Health is also addressing Oak Street Health's outstanding 0% Convertible Senior Notes due 2026. Holders of these notes will be offered to repurchase them at par value plus accrued special interest, or they have the right to convert them into Oak Street Health common stock, which now translates to the right to receive the merger consideration. The filing also outlines key covenants associated with the new term loan, including limitations on liens, dispositions, mergers, and a maximum consolidated indebtedness to total capitalization ratio.
Key Highlights
- 1CVS Health completed the acquisition of Oak Street Health on May 2, 2023.
- 2A $5.0 billion, 364-day unsecured term loan was secured and funded on May 2, 2023, to partially finance the Oak Street Health acquisition.
- 3The term loan facility matures on April 30, 2024.
- 4Oak Street Health's outstanding 0% Convertible Senior Notes ($920 million principal) are subject to a mandatory repurchase offer.
- 5Holders of the convertible notes also have the right to convert them into the merger consideration.
- 6The term loan agreement includes covenants limiting indebtedness to capitalization ratio at a maximum of 0.65 to 1.00 (potentially 0.60 to 1.00 under certain conditions).