8-KMaterial AgreementsFinancial EventsExhibits & Filings

MCKESSON CORP 8-K Report, Material Agreement (Mar 8, 2013)

Filed March 8, 2013For Securities:MCK

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.

Frequently Asked Questions

This 8-K filing primarily reports on McKesson Corporation's entry into a material definitive agreement for the issuance and sale of new debt securities, specifically $500 million of 1.40% Notes due 2018 and $400 million of 2.85% Notes due 2023. It details the terms of these notes and the agreement to sell them to underwriters.

McKesson raised approximately $891 million in net proceeds from the issuance of the new notes. The company intends to use these funds for general corporate purposes, with a specific mention of repaying borrowings under its Senior Bridge Term Loan dated December 21, 2012.

The new notes consist of $500 million in 1.40% Notes due 2018 and $400 million in 2.85% Notes due 2023. They are unsecured and unsubordinated obligations of McKesson. Interest is payable semi-annually, and the notes have specific maturity dates. They also include provisions for early redemption at the company's option, subject to a make-whole premium, and a change of control repurchase obligation.

Yes, the issuance includes a change of control provision. If a change of control of McKesson occurs and the notes are subsequently downgraded below investment grade by major rating agencies within a specified period, the company must offer to repurchase the notes from holders at 101% of their principal amount, plus accrued interest.