CDW Corp Form 8-K Summary
Business Context and Reporting Period
This Current Report on Form 8-K was filed by CDW Corporation on September 26, 2019. The filing reports the completion of a new debt offering and the finalization of a redemption notice for existing senior notes.
Key Financial Metrics and Debt Activity
- New Debt Issuance: CDW LLC and CDW Finance Corporation issued $600 million aggregate principal amount of 4.250% Senior Notes due 2028.
- Issuance Terms: Issued at 100% of principal; interest payable semi-annually starting April 1, 2020; maturity date is April 1, 2028.
- Debt Redemption: The company finalized the redemption of $525 million aggregate principal amount of 5.0% Senior Notes due 2023.
- Redemption Terms: Redemption price is 102.500% of principal plus accrued interest; redemption date is October 12, 2019.
- Liquidity and Cash Flow: The filing text does not provide specific values for revenue, profit, operating cash flow, or current liquidity ratios.
Material Changes and Strategic Actions
The primary material change is the refinancing of existing debt. The company utilized proceeds from the new $600 million 2028 notes to fund the redemption of the $525 million 2023 notes. This action extends the maturity profile of the company's debt and reduces the weighted average interest rate on the retired portion of the debt (from 5.0% to 4.250%).
Guidance, Risks, and Covenants
- Redemption Rights: The new 2028 notes may be redeemed prior to October 1, 2022, 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 October 1, 2022, at 104.250% using proceeds from equity offerings.
- Change of Control: Holders may require repurchase at 101% of principal plus accrued interest if certain change of control events occur.
- Covenants: The 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.
- Events of Default: Includes failure to pay principal or interest, failure to comply with covenants, and bankruptcy/insolvency events, which may trigger immediate acceleration of debt.
Investor Verification Checklist
- Verify the exact cash proceeds received from the $600 million offering after underwriting fees and expenses.
- Confirm the total cash outflow required for the October 12, 2019, redemption of the 2023 notes (principal plus 2.5% premium and accrued interest).
- Review the updated debt maturity schedule to assess refinancing risks in the 2023-2028 window.
- Examine the impact of the new covenants on future capital structure flexibility and subsidiary operations.