8-KShareholder Matters

QUEST DIAGNOSTICS INC 8-K Report, Rights Modification (Jun 13, 2012)

Filed June 13, 2012For Securities:DGX

Summary

Quest Diagnostics Incorporated (DGX) filed an 8-K on June 13, 2012, reporting a material modification to the rights of its security holders. This modification stems from the company's repayment of all outstanding amounts under its Credit Agreement on May 31, 2012. As a direct consequence of this debt repayment, the subsidiary guarantees supporting the company's approximately $3.3 billion in outstanding senior notes were released. This development is significant for investors as it alters the credit structure and security backing the company's senior notes. The release of subsidiary guarantees means that these senior noteholders no longer have the backing of these specific subsidiaries. Investors holding or considering holding DGX senior notes should review the company's financial statements, particularly Note 11 from their 2011 10-K, for a detailed list of the affected senior notes and understand the implications of the released guarantees on their investment's risk profile.

Key Highlights

  • 1Quest Diagnostics repaid all outstanding debt under its Credit Agreement as of May 31, 2012.
  • 2Subsidiary guarantees supporting approximately $3.3 billion of outstanding senior notes were released.
  • 3The release of guarantees is a material modification to the rights of senior noteholders.
  • 4This action was triggered by the full repayment of the company's credit facility.
  • 5Investors should consult Note 11 of the 2011 10-K for a list of the specific senior notes affected.
  • 6The filing does not indicate any new debt issuance or changes to equity structure at this time.

Frequently Asked Questions

The primary event reported is the release of subsidiary guarantees for Quest Diagnostics' senior notes, which occurred because the company fully repaid its outstanding Credit Agreement debt on May 31, 2012.

The release of guarantees means that the senior noteholders no longer have the explicit backing of these subsidiaries for their investment. This could potentially alter the risk profile of those senior notes.

Approximately $3.3 billion in aggregate principal amount of the company's outstanding senior notes had their subsidiary guarantees released.

Investors can refer to Note 11 of Quest Diagnostics' annual financial statements included in their Form 10-K for the fiscal year ended December 31, 2011, filed on February 16, 2012, for a listing of the company's outstanding senior notes.