What is the total amount of debt McKesson issued in this filing?

McKesson issued a total of $1.7 billion in aggregate principal amount of notes, comprised of $600 million of 3.25% Notes due 2016, $600 million of 4.75% Notes due 2021, and $500 million of 6.00% Notes due 2041.

How will McKesson use the proceeds from this debt issuance?

McKesson expects to use the net proceeds of approximately $1.677 billion for general corporate purposes, specifically including the repayment of borrowings outstanding under its Senior Bridge Term Loan Agreement.

What are the key terms and protections for investors in these new notes?

The notes are unsecured and unsubordinated obligations. The indenture includes covenants restricting the company's ability to create liens or engage in sale-leaseback transactions. Additionally, there is a change of control provision that requires McKesson to repurchase the notes at 101% of the principal amount plus accrued interest if a change of control occurs and the notes are subsequently downgraded below investment grade by major rating agencies.

What is the significance of the different interest rates and maturity dates for these notes?

The tiered interest rates (3.25%, 4.75%, 6.00%) and staggered maturity dates (2016, 2021, 2041) indicate McKesson's strategy to manage its debt profile. This approach allows the company to diversify its debt maturities, potentially optimize its weighted average cost of debt, and align its borrowing terms with its long-term financial planning and obligations.

MCK 8-K: Material Agreements & Financial Events

Summary

McKesson Corporation (MCK) has filed an 8-K report to disclose the creation of significant new debt through the issuance of three series of notes totaling $1.7 billion. These notes include $600 million of 3.25% Notes due 2016, $600 million of 4.75% Notes due 2021, and $500 million of 6.00% Notes due 2041. The company intends to use the net proceeds, approximately $1.677 billion, for general corporate purposes, specifically mentioning the repayment of borrowings under its Senior Bridge Term Loan Agreement. This debt issuance represents a substantial increase in McKesson's leverage. Investors should note the varying interest rates and maturity dates, which suggest a strategy to diversify debt maturities and manage interest expense. The inclusion of covenants, such as limitations on liens and sale-leaseback transactions, and a change of control provision that could trigger a repurchase offer, are important for assessing the company's financial flexibility and risk profile. The offering was made under an existing shelf registration statement, indicating established access to capital markets.

Key Highlights

1McKesson issued $1.7 billion in aggregate principal amount of new notes: $600 million of 3.25% Notes due 2016, $600 million of 4.75% Notes due 2021, and $500 million of 6.00% Notes due 2041.
2Net proceeds from the offering are expected to be approximately $1.677 billion.
3Proceeds are earmarked for general corporate purposes, including the repayment of outstanding borrowings under the Senior Bridge Term Loan Agreement.
4The notes are unsecured and unsubordinated, ranking equally with other existing and future unsecured and unsubordinated indebtedness.
5The indenture includes covenants limiting the creation of liens, sale and leaseback transactions, and asset sales, with certain exceptions.
6A change of control provision requires McKesson to offer to repurchase notes at 101% of principal if certain conditions are met (change of control + investment grade rating downgrade).
7The offering was conducted under McKesson's automatic shelf registration statement on Form S-3.

MCKESSON CORP 8-K Report, Material Agreement (Feb 28, 2011)

Summary

Key Highlights

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