CDW Corp Form 8-K Summary
Business Context and Reporting Period
This Current Report on Form 8-K was filed by CDW Corporation on March 2, 2017, covering material events occurring on February 28, 2017, and March 2, 2017. The filing details significant amendments to existing debt facilities and the issuance and redemption of senior notes.
Key Financial Metrics and Debt Structure
- New Debt Issuance: CDW and CDW Finance Corporation issued $600 million aggregate principal amount of 5.0% Senior Notes due 2025.
- Debt Redemption: The company called for the redemption of all outstanding $600 million aggregate principal amount of 6.0% Senior Notes due 2022.
- Term Loan Amendment: Interest rate on senior secured term loans reduced by 0.25%.
- LIBOR Floor: Minimum LIBOR rate on term loans reduced from 0.75% per annum to 0.00% per annum.
- Revenue and Profit: The filing text does not provide specific values for revenue, profit, cash flow, or margins.
Material Changes Versus Prior Period
The primary material changes involve the restructuring of the company's capital structure:
- Interest Cost Reduction: The amendment to the Term Loan Agreement lowers borrowing costs immediately.
- Debt Refinancing: The company is replacing higher-cost debt (6.0% notes due 2022) with lower-cost debt (5.0% notes due 2025), extending the maturity profile.
- Redemption Terms: The 6.0% notes are being redeemed at 100% of principal plus a "make whole" premium and accrued interest, with a redemption date of April 3, 2017.
Guidance, Outlook, and Risks
Management Commentary: The filing focuses on the execution of debt transactions rather than operational guidance. The issuance of the 2025 notes was completed at 100% of the principal amount.
Risks and Covenants: The new 5.0% Senior Notes are subject to restrictive covenants, including limitations on incurring additional non-guarantor indebtedness, creating liens, and entering into sale and lease-back transactions. The indenture includes customary events of default, such as failure to pay principal or interest, which could trigger immediate acceleration of debt.
Unusual Items: The filing notes a "make whole" premium applies to the redemption of the 2022 notes and the early redemption of the 2025 notes prior to March 1, 2020.
Investor Verification Checklist
- Verify the exact "make whole" premium calculation for the redemption of the 6.0% Senior Notes due 2022.
- Confirm the total cash outflow required for the April 3, 2017, redemption of the 2022 notes.
- Review the full text of the First Amendment to the Term Loan Agreement (Exhibit 10.1) for additional covenants or conditions.
- Assess the impact of the new 5.0% notes on the company's overall leverage ratios and interest coverage.
- Check the press release (Exhibit 99.1) for any additional commentary on the strategic rationale for the refinancing.