01—Abstract
Summary
Summary of the 8-K filed August 23, 2024. Cited figures are marked; the original filing is the authoritative source.
On August 23, 2024, Labcorp Holdings Inc. (the "Company") and certain of its subsidiaries entered into a three-year, $300 milliona accounts receivable securitization facility with PNC Bank, National Association, as administrative agent.
The facility permits Labcorp Receivables LLC, a special purpose vehicle and wholly-owned subsidiary of the Company and Laboratory Corporation of America Holdings ("LCAH"), to draw up to $300 millionb, subject to the outstanding amount of the eligible receivables pool and other factors. It contains an accordion feature that can increase the limit up to $700 million, subject to certain conditions. Under the arrangement, LCAH and Laboratory Corporation of America sold or contributed their existing and future accounts receivable and related assets to Labcorp Receivables, which may sell or obtain financing against those assets and has granted a security interest in all of its assets.
LCAH services the receivables for a fee. The Company has agreed to guarantee the performance (but not the collectability) of the originators and LCAH as servicer under the facility agreements. Labcorp Receivables is a separate legal entity, so its assets are not available to pay the creditors of the Company or its subsidiaries, though excess collections may be remitted to the Company.
Loans and investments under the facility accrue interest at a daily or term SOFR rate plus a 0.10%c SOFR adjustment, or a base rate, in each case plus an applicable margin, and Labcorp Receivables pays certain additional fees. The agreements contain customary representations, covenants, and events of default, including failure to pay, certain defaults on other material indebtedness, a change of control, and bankruptcy or insolvency events. The filing also reports the related direct financial obligation under Item 2.03 by reference to Item 1.01.
02—Key points
Key Highlights
- Entered a three-year, $300 million accounts receivable securitization facility with PNC Bank, National Association, as administrative agent, dated August 23, 2024.
- The facility has an accordion feature allowing an increase in the limit up to $700 million, subject to satisfaction of certain conditions.
- Labcorp Receivables LLC, a wholly-owned special purpose vehicle of the Company and LCAH, holds the sold or contributed receivables and grants a security interest in all of its assets.
- Labcorp Receivables' assets are not available to pay creditors of the Company or its subsidiaries, though excess collections may be remitted to the Company.
- The Company guarantees the performance of the originators and LCAH as servicer, but neither the Company nor the originators guarantee collectability of the receivables.
- Borrowings accrue interest at daily or term SOFR plus a 0.10% SOFR adjustment, or a base rate, plus an applicable margin, with additional agent and purchaser fees.
- Agreements include customary covenants and events of default, including a change of control and bankruptcy or insolvency events.
03—Questions
Frequently Asked Questions
What is the size and term of the new Securitization Facility?
The facility is a three-year, $300 million accounts receivable securitization facility with PNC Bank, National Association, as administrative agent. Labcorp Receivables may draw up to $300 million, subject to the outstanding amount of the eligible receivables pool and other factors.
Can the facility be expanded?
Yes. The facility contains an accordion that can increase the limit up to $700 million, subject to satisfaction of certain conditions.
Does the Company guarantee the receivables?
The Company has guaranteed the performance of the Originators and LCAH, as servicer, under the facility agreements through a Performance Guaranty dated August 23, 2024. The filing states that neither the Company nor the Originators guarantee the collectability of the receivables.
Are the receivables available to the Company's general creditors?
No. Labcorp Receivables is a separate legal entity with its own creditors, who have access to its assets before they become available to the Company. Its assets are not available to pay creditors of the Company or its subsidiaries, although collections in excess of amounts owed to the Purchasers and other Labcorp Receivables creditors may be remitted to the Company.
What are the key terms that could trigger default?
Events of default, subject to cure periods, include failure by Labcorp Receivables to pay amounts when due, certain defaults on other material indebtedness, a change of control, and bankruptcy and insolvency events.
04—Continue