Business Context and Reporting Period
Company: McKesson Corporation
Filing Type: Form 8-K (Current Report)
Date of Report: October 22, 2015
Event: Entry into a new material definitive credit agreement and termination of existing financing facilities to consolidate global liquidity resources.
Key Financial Metrics and Liquidity
- New Credit Facility: Revolving line of credit up to $3.5 billion.
- Currency Sublimits: $3.15 billion aggregate availability in Canadian Dollars, British Pounds Sterling, and Euros.
- Maturity Date: October 2020.
- Interest Basis: LIBOR, Canadian Dealer Offered Rate, prime rate, or alternative overnight rates plus agreed margins.
- Financial Covenant: Debt to capital ratio (excluding accumulated other comprehensive income or loss) must not exceed 65%.
- Outstanding Borrowings: No borrowings were outstanding under the terminated Existing Credit Facility at the time of termination.
Material Changes Versus Prior Period
The Company replaced its existing $1.3 billion five-year senior unsecured revolving credit facility (dated September 23, 2011) and terminated its $1.35 billion accounts receivable facility. Additionally, a €500 million five-year senior unsecured revolving credit facility was terminated. These actions consolidate global liquidity resources into the new $3.5 billion facility.
Outlook, Risks, and Contingencies
- Purpose of Funds: General corporate purposes.
- Default Provisions: In the event of default, lenders may declare unpaid amounts immediately due and payable.
- Termination Timeline: The accounts receivable facility will terminate on January 21, 2016, unless an earlier termination is agreed upon.
- Lender Relationships: Lenders and their affiliates may engage in commercial and investment banking transactions with the Company.
Investor Verification Checklist
- Verify the full text of the Credit Agreement (Exhibit 10.1) for specific fee structures and covenants not detailed in the summary.
- Confirm the exact date of termination for the accounts receivable facility (scheduled for January 21, 2016).
- Monitor the Company's debt-to-capital ratio to ensure compliance with the 65% covenant limit.
- Review subsequent filings for any utilization of the new $3.5 billion facility.