Summary
McKesson Corporation (MCK) filed an 8-K on December 4, 2012, to report the creation of a material definitive agreement, specifically the issuance and sale of $900 million in aggregate principal amount of new debt. This debt issuance consists of $500 million in 0.95% Notes due 2015 and $400 million in 2.70% Notes due 2022. The company intends to use the net proceeds of approximately $892 million for general corporate purposes, which notably includes repaying $500 million of existing 5.25% Notes maturing in March 2013 and replenishing working capital used for prior debt maturities. The notes are unsecured and unsubordinated obligations of McKesson and rank equally with other unsecured and unsubordinated indebtedness. The filing also details covenants, redemption provisions, and a change of control provision that could trigger a repurchase offer.
Key Highlights
- 1McKesson issued $500 million in 0.95% Notes due 2015 and $400 million in 2.70% Notes due 2022, totaling $900 million in new debt.
- 2Net proceeds from the offering are approximately $892 million.
- 3Proceeds will be used for general corporate purposes, including repaying $500 million in 5.25% Notes maturing March 1, 2013.
- 4The new notes are unsecured and unsubordinated debt obligations of McKesson.
- 5The issuance was conducted under McKesson's automatic shelf registration statement on Form S-3.
- 6Covenants include limitations on liens, sale and leaseback transactions, and mergers/asset sales.
- 7A change of control provision requires McKesson to offer to repurchase notes at 101% of principal if a change of control occurs concurrently with an investment grade downgrade by major rating agencies.