Summary
McKesson Corporation (MCK) has filed an 8-K report on September 28, 2004, detailing the entry into a significant new credit agreement. On September 24, 2004, the company and its subsidiary McKesson Canada Corporation secured a $1.3 billion, five-year senior unsecured revolving credit facility. This new facility is intended for general corporate purposes and replaces two prior credit facilities totaling $1.15 billion, which had earlier expiration dates and no outstanding borrowings at the time of termination. The new credit facility offers substantial financial flexibility by increasing the available borrowing capacity. It allows for borrowings based on floating interest rates tied to either a base rate (or Canadian prime rate) or a Eurodollar rate. The agreement includes financial covenants, such as a maximum debt to capitalization ratio, which are substantially similar to those in the company's previous agreements. This strategic move underscores McKesson's ongoing need for robust liquidity to support its operations and potential future growth initiatives.
Key Highlights
- 1McKesson Corporation entered into a new $1.3 billion, five-year senior unsecured revolving credit facility on September 24, 2004.
- 2The new credit facility replaces two previous credit lines totaling $1.15 billion, which were set to expire sooner.
- 3There were no outstanding borrowings under the previous credit facilities at the time of their termination.
- 4The new facility is for general corporate purposes, providing increased financial flexibility.
- 5Borrowings under the new facility will bear interest at floating rates based on prime or Eurodollar rates.
- 6The agreement includes standard financial covenants, such as a maximum debt to capitalization ratio, similar to prior agreements.
- 7The credit facility involves a syndicate of major financial institutions, including Bank of America as Administrative Agent and JPMorgan Chase and Wachovia as Co-Syndication Agents.