Business Context and Reporting Period
Company: McKesson Corporation
Filing Type: Form 8-K (Current Report)
Date of Report: November 28, 2018
Event: Creation of a direct financial obligation through the issuance of new senior notes.
Key Financial Metrics and Transaction Details
The Company entered into an Underwriting Agreement to issue and sell the following debt securities:
- 2020 Notes: $700,000,000 aggregate principal amount at 3.650% interest per year.
- 2029 Notes: $400,000,000 aggregate principal amount at 4.750% interest per year.
- Total Principal Amount: $1,100,000,000.
- Expected Net Proceeds: Approximately $1.092 billion after estimated expenses.
- Public Offering Prices: 99.954% of principal for 2020 Notes; 99.704% of principal for 2029 Notes.
- Interest Payment Dates: May 30 and November 30 annually, commencing May 30, 2019.
The filing text does not provide specific values for current revenue, profit, cash flow, margins, or existing total debt levels outside of this new issuance.
Material Changes and Use of Proceeds
Use of Proceeds: The Company expects to use the net proceeds for general corporate purposes, which may include the repayment of debt.
Debt Structure: The Notes are unsecured and unsubordinated obligations, ranking equally with all existing and future unsecured indebtedness.
Terms, Covenants, and Risks
- Redemption: The Company may redeem the Notes in whole or in part prior to maturity with 15 to 45 days' notice at redemption prices including a make-whole premium.
- Covenants: The Indenture includes limitations on creating certain liens, entering into sale and leaseback transactions, and consolidating, merging, or selling substantially all assets.
- Change of Control: If a change of control occurs and the Notes are downgraded below investment grade, the Company must offer to repurchase the Notes at 101% of the principal amount plus accrued interest.
- Default Provisions: The Indenture contains customary events of default.
Investor Verification Checklist
- Verify the exact net proceeds received after finalizing estimated expenses.
- Confirm the specific allocation of proceeds toward debt repayment versus other general corporate purposes.
- Review the full text of the Officer's Certificate and Underwriting Agreement (Exhibits 4.1, 4.2, 4.3, and 99.1) for detailed covenant exceptions.
- Monitor the Company's credit rating status to assess the risk of triggering the change of control repurchase provision.