CDW Corp Form 8-K Summary
Business Context and Reporting Period
This Current Report on Form 8-K was filed by CDW Corporation on February 26, 2015, with the earliest event reported on that date. The filing details a significant capital structure transaction involving the issuance of new senior notes and the concurrent redemption of existing debt.
Key Financial Metrics and Debt Activity
- New Debt Issuance: CDW LLC and CDW Finance Corporation sold $525,000,000 aggregate principal amount of 5.0% Senior Notes due 2023.
- Issuance Terms: Issued at 100% of principal; interest payable semi-annually starting September 1, 2015; maturity date is September 1, 2023.
- Debt Redemption: The company called for redemption of all outstanding $503.9 million of 8.5% Senior Notes due 2019.
- Redemption Cost: Redemption price is 104.250% of principal plus accrued interest, with a redemption date of April 2, 2015.
- Liquidity and Cash Flow: The filing does not provide specific cash flow, revenue, or profit figures for the period.
Material Changes Versus Prior Period
The primary material change is the refinancing of high-interest debt. The company is replacing $503.9 million of debt carrying an 8.5% interest rate with $525 million of new debt carrying a 5.0% interest rate. This action is expected to reduce future interest expenses and extend the debt maturity profile.
Guidance, Risks, and Covenants
- Covenants: The new Indenture restricts the ability to incur additional non-guarantor indebtedness, issue non-guarantor preferred stock, create liens on certain assets, and enter into sale and lease-back transactions.
- Redemption Options: The new Notes may be redeemed prior to March 1, 2018, at a "make whole" premium. After March 1, 2018, they may be redeemed at declining premiums. Up to 40% of the principal may be redeemed prior to March 1, 2018, using proceeds from equity offerings at 105.000% of principal.
- Change of Control: In the event of a change of control, noteholders may require repurchase at 101% of principal plus accrued interest.
- 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 exact net proceeds from the $525 million offering after underwriting fees and expenses.
- Confirm the total cash outflow required for the April 2, 2015, redemption of the 8.5% Senior Notes, including the 4.25% premium and accrued interest.
- Review the full text of the Indenture (Exhibits 4.1 and 4.2) to understand specific limitations on future borrowing and asset dispositions.
- Assess the impact of the interest rate reduction (from 8.5% to 5.0%) on future earnings and cash flow projections.