What is the purpose of this debt issuance?

McKesson expects to use the net proceeds of approximately $495.8 million for general corporate purposes, which may include the repayment of existing debt. This indicates a strategic move to manage its capital structure and potentially lower its cost of borrowing or extend its debt maturities.

What are the terms of the new notes?

The notes bear interest at a rate of 0.900% per annum, payable semi-annually on June 3 and December 3, beginning June 3, 2021. The notes are unsecured and unsubordinated obligations of McKesson, ranking equally with other unsecured and unsubordinated indebtedness. McKesson has the option to redeem the notes under certain conditions, including a make-whole premium.

Are there any specific conditions that would require McKesson to repurchase these notes?

Yes, the indenture includes provisions for a change of control event. If a change of control occurs and the notes are subsequently downgraded below investment grade by rating agencies within a specified period, McKesson will be required to offer to repurchase the notes at 101% of their principal amount, plus accrued interest, unless they have already exercised their optional redemption right.

How does this debt issuance impact McKesson's balance sheet?

This issuance increases McKesson's total debt by $500 million. As the notes are unsecured and rank pari passu with existing unsecured debt, they do not alter the company's capital structure seniority. The use of proceeds for debt repayment could offset this increase or reduce overall interest expense depending on the specific debt refinanced.

MCK 8-K: Financial Events

Summary

McKesson Corporation (MCK) announced on December 3, 2020, the issuance and sale of $500 million in aggregate principal amount of 0.900% Notes due 2025. These notes are unsecured and unsubordinated debt obligations of the company. The offering was conducted under McKesson's existing shelf registration statement. The net proceeds from this issuance are expected to be approximately $495.8 million after expenses. McKesson intends to use these proceeds for general corporate purposes, which may include the repayment of debt. This move suggests a proactive approach to managing its capital structure and potentially optimizing its debt profile.

Key Highlights

1McKesson issued $500 million of 0.900% Notes due 2025.
2The notes mature in 2025 and carry a coupon rate of 0.900% per year.
3Proceeds are intended for general corporate purposes, including potential debt repayment.
4The notes are unsecured and rank equally with other existing and future unsecured, unsubordinated debt.
5The offering was made pursuant to McKesson's Form S-3 automatic shelf registration statement.
6A change of control event coupled with a downgrade below investment grade could trigger a mandatory repurchase offer at 101% of the principal amount plus accrued interest.

MCKESSON CORP 8-K Report, Financial Obligation (Dec 3, 2020)

Summary

Key Highlights

Frequently Asked Questions