CDW Corp Form 8-K Summary
Business Context and Reporting Period
This Current Report on Form 8-K, dated July 31, 2014 (filed August 6, 2014), details a significant capital restructuring by CDW Corporation. The filing reports the completion of a new debt offering and the concurrent redemption of existing senior notes.
Key Financial Metrics and Debt Activity
- New Debt Issuance: Completed the sale of $600.0 million aggregate principal amount of 6.00% Senior Notes due 2022.
- Issuance Terms: Issued at 100% of principal; interest payable semi-annually starting February 15, 2015.
- Debt Redemption (Senior Secured Notes): Called for redemption of $325.0 million of 8.0% Senior Secured Notes due 2018 at 106.061% of principal.
- Debt Redemption (Senior Notes): Called for redemption of $234.7 million of 8.5% Senior Notes due 2019 at 108.764% of principal.
- Redemption Date: September 5, 2014.
- Liquidity and Cash Flow: The filing does not provide specific cash flow statements, liquidity ratios, or current cash balances.
- Revenue and Profit: The filing does not contain revenue, profit, or margin data.
Material Changes and Strategic Actions
The primary material change is the refinancing of higher-cost debt with lower-cost debt. CDW replaced portions of its 8.0% and 8.5% obligations with new 6.00% notes, effectively reducing its weighted average interest rate on the refinanced portion of its debt portfolio. The company utilized the proceeds from the new offering to fund the redemption of the older notes.
Guidance, Risks, and Covenants
- Covenants: The new Indenture restricts restricted subsidiaries from incurring additional indebtedness or issuing preferred stock without guarantees. It also limits the creation of liens on assets, sale-leaseback transactions, and asset dispositions.
- Redemption Options:
- Pre-August 15, 2017: Redeemable at 100% principal plus accrued interest and a "make-whole" premium.
- Post-August 15, 2017: Redeemable at 100% principal plus accrued interest and a declining premium.
- Equity Proceeds: Up to 40% of principal may be redeemed prior to August 15, 2017, using equity offering proceeds at 106% of principal.
- Change of Control: Note holders may require repurchase at 101% of principal plus accrued interest upon certain change of control events.
- Events of Default: Includes failure to pay principal/interest, covenant breaches, and bankruptcy/insolvency events which trigger immediate acceleration of debt.
- Guidance: The filing does not provide updated financial guidance or management outlook regarding future earnings.
Investor Verification Checklist
- Verify the total cash outflow required for the September 5, 2014 redemption, including the specific make-whole premiums and accrued interest.
- Confirm the net impact on the company's leverage ratios following the $600 million issuance and $559.7 million redemption.
- Review the full text of the Indenture (Exhibit 4.1) to understand specific limitations on future borrowing and asset sales.
- Assess the remaining balance of the 8.5% Senior Notes due 2019 after the partial redemption of $234.7 million.