Summary
McKesson Corporation (MCK) has filed an 8-K report detailing the entry into a $2.0 billion Senior Bridge Term Loan Agreement with Bank of America, N.A. This financing is specifically intended to fund the upcoming acquisition of US Oncology Holdings, Inc., including the payment of merger consideration, repayment of US Oncology's existing debt, and associated transaction costs. The bridge loan is a one-year unsecured facility, with terms and conditions largely mirroring McKesson's existing revolving credit facility, including interest based on prime rate or LIBOR. The company anticipates refinancing this bridge debt with longer-term financing before its maturity. Key covenants in the agreement include maintaining a debt to total capitalization ratio not exceeding 56.5% and provisions for mandatory prepayments tied to certain events like asset sales or additional debt incurrence. This filing signals a significant step in McKesson's strategic growth through the acquisition of US Oncology, a move that will require substantial short-term financing.
Key Highlights
- 1McKesson entered into a $2.0 billion Senior Bridge Term Loan Agreement to finance the acquisition of US Oncology Holdings, Inc.
- 2The bridge loan is a one-year unsecured facility provided by Bank of America, N.A., as Administrative Agent.
- 3Funds from the bridge loan will cover merger consideration, US Oncology's debt repayment, and transaction costs.
- 4The loan terms are similar to McKesson's existing revolving credit facility, with interest based on prime rate or LIBOR.
- 5The agreement includes a covenant requiring McKesson to maintain a debt to total capitalization ratio of no greater than 56.5%.
- 6McKesson expects to refinance the bridge loan with longer-term debt before its one-year maturity.