Summary
McKesson Corporation (MCK) filed an 8-K report on February 21, 2018, detailing the issuance and sale of $600,000,000 aggregate principal amount of 3.950% Notes due 2028. This offering, along with a recent Euro-denominated note issuance, is primarily intended to fund the repurchase of up to $1.1 billion of certain outstanding McKesson notes. The remaining proceeds are allocated for general corporate purposes, including potential debt repayment. These new notes are unsecured and rank equally with other existing unsecured and unsubordinated debt. The filing also outlines specific redemption provisions, including a make-whole premium, and covenants that restrict the company's ability to create liens or engage in sale and leaseback transactions. Importantly, a change of control event combined with a downgrade below investment grade would trigger an offer to repurchase the notes at 101% of par.
Key Highlights
- 1McKesson issued $600 million in 3.950% Notes due 2028.
- 2The net proceeds from this offering, along with other recent debt issuances, are primarily designated for repurchasing up to $1.1 billion of existing McKesson notes.
- 3The new notes bear a fixed interest rate of 3.950% per annum, payable semi-annually.
- 4The Notes are unsecured and rank equally with the Company's other unsecured and unsubordinated indebtedness.
- 5The company has the option to redeem the notes prior to maturity, subject to a make-whole premium.
- 6A 'change of control' coupled with a credit rating downgrade triggers an offer to repurchase the notes at a premium (101% of principal plus accrued interest).
- 7Any remaining proceeds after the note repurchase will be used for general corporate purposes, potentially including debt repayment.