CDW Corp Form 8-K Summary
Business Context and Reporting Period
This Current Report on Form 8-K was filed by CDW Corporation on August 10, 2020, with the earliest event reported on August 10, 2020. The filing details a material definitive agreement involving the issuance of new senior notes and the redemption of existing debt.
Key Financial Metrics and Debt Activity
- New Debt Issuance: CDW LLC and CDW Finance Corporation completed the sale of $700 million aggregate principal amount of 3.25% Senior Notes due 2029.
- Issuance Terms: Notes were issued at 100% of principal. Interest is payable semi-annually starting February 15, 2021.
- Debt Redemption: The company called for redemption of all outstanding $600 million aggregate principal amount of 5.0% Senior Notes due 2025.
- Redemption Cost: The redemption price is 103.750% of the principal amount plus accrued interest, with a redemption date of September 9, 2020.
- Liquidity and Margins: The filing text does not provide specific values for revenue, profit, cash flow, or operating margins.
Material Changes and Debt Restructuring
The company is executing a debt refinancing strategy by replacing higher-cost debt with lower-cost debt. The new 3.25% notes replace the 5.0% notes due in 2025, resulting in a reduction of the coupon rate by 175 basis points on the refinanced portion. The maturity profile is extended from 2025 to 2029.
Guidance, Risks, and Covenants
- Redemption Options: The new notes may be redeemed prior to August 15, 2023, at a "make whole" premium. After that date, they may be redeemed at declining premiums. Up to 40% of the principal may be redeemed prior to August 15, 2023, using proceeds from equity offerings at 103.250% of principal.
- Change of Control: In the event of a change of control, noteholders may require repurchase at 101% of principal plus accrued interest.
- Covenants: The Indenture restricts the ability to incur additional non-guarantor indebtedness, create liens on certain assets, enter into sale and lease-back transactions, or consolidate/merge without consent.
- Events of Default: Includes failure to pay principal or interest, failure to comply with covenants, and bankruptcy/insolvency events which trigger immediate acceleration of debt.
Investor Verification Checklist
- Verify the final closing date and receipt of net proceeds from the $700 million 2029 note offering.
- Confirm the total cash outflow required for the September 9, 2020, redemption of the $600 million 2025 notes, including the 3.75% premium and accrued interest.
- Review the updated debt maturity schedule to assess liquidity requirements for the 2021-2029 period.
- Examine the impact of the new covenants on future capital flexibility, specifically regarding additional indebtedness and asset liens.