Business Context and Reporting Period
Company: McKesson Corporation
Filing Type: Form 8-K (Current Report)
Date of Report: September 24, 2004
Event: Entry into a Material Definitive Agreement (Credit Facility)
Key Financial Metrics and Debt Structure
- New Credit Facility: $1.3 billion five-year senior unsecured revolving credit facility.
- Interest Rate: Floating rate based on base rate (or Canadian prime rate) or Eurodollar rate.
- Outstanding Borrowings: No borrowings were outstanding at the time of the agreement's closing.
- Replaced Facilities:
- $550 million three-year revolving credit facility (previously expiring September 2005).
- $650 million 364-day credit facility (previously expiring September 28, 2004).
- Financial Covenants: Includes a maximum debt to capitalization ratio; terms are substantially the same as previous facilities.
Note: This filing does not provide specific values for revenue, profit, cash flow, or margins.
Material Changes Versus Prior Period
The primary material change is the consolidation and expansion of the company's credit facilities. The new $1.3 billion facility replaces two separate facilities totaling $1.2 billion ($550 million + $650 million), extending the maturity of the larger portion of the debt from 364 days and three years to five years.
Guidance, Outlook, and Management Commentary
- Purpose: The facility was obtained for general corporate purposes and to replace existing credit facilities.
- Administrative Agents: Bank of America, N.A. (Administrative Agent and Canadian Administrative Agent).
- Other Agents: JPMorgan Chase Bank and Wachovia Bank (Co-Syndication Agents); Wachovia Bank (Letter of Credit Issuer); The Bank of Nova Scotia and Bank of Tokyo-Mitsubishi Ltd. (Co-Documentation Agents).
Important Facts for Investor Verification
- Verify the specific terms of the "maximum debt to capitalization ratio" covenant in the full Credit Agreement (Exhibit 99.1).
- Confirm the company's current leverage ratio to ensure compliance with the new covenants.
- Monitor future borrowings under the new $1.3 billion facility to assess liquidity usage.
- Review the impact of floating interest rates on future interest expense given the current rate environment.