8-KMaterial AgreementsOther EventsExhibits & Filings

QUEST DIAGNOSTICS INC 8-K Report, Material Agreement (May 26, 2016)

Filed May 26, 2016For Securities:DGX

Summary

Quest Diagnostics Incorporated (DGX) filed an 8-K on May 26, 2016, to report a material definitive agreement. The company successfully issued $500 million in aggregate principal amount of 3.450% Senior Notes due 2026. These notes are unsecured and rank equally with other senior unsecured obligations, with interest payments semi-annually and a maturity date of June 1, 2026. The issuance was made under an existing indenture, further supplemented by an eighteenth supplemental indenture dated May 26, 2016. The indenture contains covenants that restrict the company and its subsidiaries from certain actions, including creating liens, engaging in sale and leaseback transactions, merging, transferring assets, incurring debt at non-guarantor subsidiaries, and making restricted payments. Notably, a change of control triggering event would require the company to offer to repurchase the notes at 101% of their principal amount plus accrued interest.

Key Highlights

  • 1Quest Diagnostics issued $500 million of 3.450% Senior Notes due 2026.
  • 2The notes mature on June 1, 2026, with semi-annual interest payments on June 1 and December 1.
  • 3The notes are senior unsecured obligations and rank equally with other senior unsecured debt.
  • 4The issuance is governed by an indenture, which includes covenants limiting liens, sale-leasebacks, asset transfers, and certain debt incurrence.
  • 5A 'change of control' event would trigger an offer to repurchase the notes at a premium (101% of principal).
  • 6An underwriting agreement with Goldman, Sachs & Co., Mizuho Securities USA Inc., and Wells Fargo Securities, LLC was entered into for the offering.
  • 7The filing also includes the opinion of counsel regarding the legality of the notes.

Frequently Asked Questions

This 8-K filing primarily serves to announce Quest Diagnostics' entry into a material definitive agreement, specifically the issuance of $500 million in senior notes. It also provides details about the terms of these notes and the governing indenture.

The new notes have a principal amount of $500 million, a coupon rate of 3.450% per annum, and mature on June 1, 2026. Interest will be paid on June 1 and December 1 of each year, starting December 1, 2016.

The indenture contains covenants that restrict Quest Diagnostics and its subsidiaries from taking certain actions, such as creating new liens, engaging in sale and leaseback transactions, or undertaking major asset disposals or mergers without meeting specific conditions. This provides a layer of security for the noteholders by limiting the company's financial flexibility in these areas.

If a 'change of control triggering event' occurs as defined in the indenture, Quest Diagnostics will be required to offer to purchase the notes from the holders at a price of 101% of their principal amount, plus any accrued and unpaid interest. This is designed to protect noteholders from significant adverse changes in the company's ownership or control.