Summary
McKesson Corporation (MCK) filed an 8-K on February 17, 2017, to report on the issuance of significant new debt. The company issued €1.2 billion in Euro Notes (0.625% due 2021 and 1.500% due 2025) and £450 million in Sterling Notes (3.125% due 2029). The net proceeds from these offerings, estimated at approximately $1.8 billion, are intended for general corporate purposes, notably including the repayment of existing debt maturing in March 2017. This move signals proactive debt management and a focus on refinancing near-term obligations. In addition to the debt issuance, the filing also discloses a shareholder derivative lawsuit filed on January 31, 2017. The suit names certain directors and officers and alleges breaches of fiduciary duties related to the dissemination of misleading information and inadequate internal controls concerning controlled substance reporting practices, stemming from a prior settlement with the DEA and DOJ. This litigation adds a layer of potential risk and scrutiny for the company.
Key Highlights
- 1McKesson issued €1.2 billion in Euro Notes (0.625% due 2021, 1.500% due 2025) and £450 million in Sterling Notes (3.125% due 2029).
- 2The aggregate principal amount of the new debt issuance is substantial, signaling the company's financing activities.
- 3Net proceeds of approximately $1.8 billion are expected from the offerings.
- 4The primary use of proceeds is for general corporate purposes, including the repayment of maturing debt totaling $1.2 billion in March 2017.
- 5The notes are unsecured and unsubordinated obligations of McKesson.
- 6A shareholder derivative complaint was filed on January 31, 2017, against certain directors and officers concerning fiduciary duties and internal controls related to controlled substance reporting.
- 7The company has included standard covenants and default provisions in the debt agreements, including a change of control provision triggered by a downgrade below investment grade.