8-KMaterial AgreementsFinancial EventsOther Events+1

MCKESSON CORP 8-K Report, Agreement Terminated (Jun 16, 2023)

Filed June 16, 2023For Securities:MCK

Summary

McKesson Corporation (MCK) filed an 8-K on June 15, 2023, detailing the closing of a significant debt offering and the subsequent satisfaction and discharge of a prior debt instrument. The company successfully issued and sold $1 billion in aggregate principal amount of new notes, comprising $400 million of 4.900% Notes due 2028 and $600 million of 5.100% Notes due 2033. This offering was conducted under their existing shelf registration statement and will provide approximately $991.2 million in net proceeds after underwriting expenses. The proceeds from this offering were strategically utilized. A portion was used to fund the repurchase of outstanding 3.796% Notes due 2024 through a concurrent tender offer, and to satisfy and discharge the related indenture. The remaining proceeds are earmarked for general corporate purposes. This move indicates proactive debt management and a refinancing strategy to potentially lower borrowing costs and extend maturity profiles. Investors should note the terms of the new notes, including redemption provisions, covenants, and a change of control provision that includes a repurchase obligation upon a downgrade to below investment grade.

Key Highlights

  • 1McKesson raised $1 billion through the issuance of new debt: $400 million in 4.900% Notes due 2028 and $600 million in 5.100% Notes due 2033.
  • 2The company received approximately $991.2 million in net proceeds from the notes offering after underwriting fees.
  • 3Proceeds were used to repurchase a portion of its 3.796% Notes due 2024 via a concurrent tender offer.
  • 4The 2024 Notes Indenture was satisfied and discharged following the tender offer, releasing McKesson from its obligations.
  • 5The new notes are unsecured and unsubordinated, ranking equally with existing unsecured and unsubordinated debt.
  • 6A change of control provision requires McKesson to offer to repurchase the new notes at 101% of principal if a change of control occurs and the notes are downgraded below investment grade.
  • 7The remaining proceeds from the offering are intended for general corporate purposes.

Frequently Asked Questions

The primary purpose of this 8-K filing was to disclose the closing of McKesson Corporation's notes offering, the terms of the newly issued debt, and the subsequent satisfaction and discharge of its prior 2024 Notes Indenture after a concurrent tender offer.

McKesson issued $400 million of 4.900% Notes due 2028 and $600 million of 5.100% Notes due 2033, for a total of $1 billion. Interest payments are scheduled for January 15 and July 15 annually, starting January 15, 2024.

McKesson conducted a tender offer to repurchase these notes. Approximately 29.52% of the outstanding 2024 Notes were accepted for purchase and retired. The company then deposited funds with a trustee to cover the remaining 2024 Notes, satisfying and discharging the related indenture.

The new notes are unsecured and rank equally with other unsecured and unsubordinated debt. Importantly, they include a change of control provision: if a change of control occurs and the notes are downgraded below investment grade by rating agencies within a specified period, McKesson must offer to repurchase the notes at 101% of the principal amount plus accrued interest.