8-KFinancial EventsOther EventsExhibits & Filings

MCKESSON CORP 8-K Report, Financial Obligation (Aug 12, 2021)

Filed August 12, 2021For Securities:MCK

Summary

McKesson Corporation (MCK) filed an 8-K on August 11, 2021, to report on the issuance of $500 million aggregate principal amount of 1.300% Notes due 2026. These notes are unsecured and unsubordinated obligations of the company. The issuance, which occurred on August 12, 2021, was made under McKesson's automatic shelf registration statement. The company expects to receive approximately $495.985 million in net proceeds from this offering, after deducting estimated expenses. These proceeds are designated for general corporate purposes, including the potential repayment of debt. The filing also details specific terms of the notes, including interest payment dates, redemption provisions with a make-whole premium, and covenants that may restrict certain corporate actions. A significant provision includes a repurchase obligation at 101% of principal plus accrued interest in the event of a change of control combined with a downgrade of the notes' rating below investment grade.

Key Highlights

  • 1McKesson issued $500 million in 1.300% Notes due 2026.
  • 2Net proceeds expected to be approximately $495.985 million.
  • 3Proceeds will be used for general corporate purposes, potentially including debt repayment.
  • 4The notes bear interest at a rate of 1.300% per annum, payable semi-annually.
  • 5The notes are unsecured and rank equally with other unsecured and unsubordinated debt.
  • 6The company may redeem the notes prior to maturity with a make-whole premium.
  • 7A change of control event coupled with a credit rating downgrade triggers a repurchase obligation for the company at 101% of principal.

Frequently Asked Questions

This 8-K filing serves to inform investors about McKesson's issuance and sale of $500 million in aggregate principal amount of 1.300% Notes due 2026. It details the terms of these notes, the net proceeds expected, and the intended use of these funds.

McKesson expects to use the net proceeds of approximately $495.985 million for general corporate purposes. This may include, among other things, the repayment of existing debt.

The new notes have a coupon rate of 1.300% per year, with interest payable on February 15 and August 15, starting in February 2022. They are unsecured and unsubordinated. McKesson has the option to redeem the notes before maturity under specific conditions, which include a make-whole premium. Importantly, the company must offer to repurchase the notes at 101% of their principal amount if a change of control occurs and the notes are downgraded below investment grade.

Yes, this issuance represents new debt for McKesson, adding $500 million to its outstanding principal amount of notes. However, the company also anticipates using these proceeds for general corporate purposes, which may include the repayment of other debt, potentially offsetting the increase in total debt.