Summary
McKesson Corporation filed an 8-K on March 8, 2013, to report on a material definitive agreement and the creation of direct financial obligations. The company entered into an Underwriting Agreement on March 5, 2013, with J.P. Morgan Securities LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated to issue and sell $500 million of 1.40% Notes due 2018 and $400 million of 2.85% Notes due 2023. These notes, totaling $900 million in aggregate principal amount, are unsecured and unsubordinated obligations of the company. The net proceeds from this offering are expected to be approximately $891 million, after deducting underwriting discounts and estimated expenses. McKesson intends to use these proceeds for general corporate purposes, specifically mentioning the repayment of borrowings under its Senior Bridge Term Loan. The filing provides details on the interest rates, maturity dates, redemption provisions, covenants, and default terms associated with these new debt issuances, including a change of control provision that would require repurchase at 101% of the principal amount under specific downgrade conditions.
Key Highlights
- 1McKesson Corporation issued $900 million in aggregate principal amount of new debt, consisting of $500 million in 1.40% Notes due 2018 and $400 million in 2.85% Notes due 2023.
- 2The offering of these Notes was conducted under the company's automatic shelf registration statement on Form S-3.
- 3Net proceeds from the debt issuance are approximately $891 million, intended for general corporate purposes, including the repayment of a Senior Bridge Term Loan.
- 4The Notes are unsecured and unsubordinated obligations of McKesson, ranking equally with existing and future unsecured and unsubordinated indebtedness.
- 5The terms include standard covenants restricting liens and sale-leaseback transactions, as well as provisions for consolidation, merger, or sale of assets.
- 6A change of control provision requires McKesson to offer to repurchase the Notes at 101% of the principal amount plus accrued interest if a change of control occurs and the Notes are downgraded below investment grade by specified rating agencies.