Item 1.01 Entry into a Material Definitive Agreement.
New Credit Agreement
On November 7, 2022, McKesson Corporation ("McKesson" or the "Company") entered
into a Credit Agreement (the "New Revolving Credit Facility") among the Company,
as borrower, the lenders party thereto, the letter of credit issuers party
thereto, Bank of America, N.A., as administrative agent, and the other parties
thereto. The New Revolving Credit Facility replaced the Company's existing $4.0
billion five-year senior unsecured revolving credit facility, dated as of
September 25, 2019, as amended (the "Existing Credit Facility"), which was filed
with the Securities and Exchange Commission on September 27, 2019 as Exhibit
10.1 to McKesson's Current Report on Form 8-K. The Existing Credit Facility was
scheduled to mature in September 2024, and provided a revolving line of credit
available of up to $4.0 billion and a $3.6 billion aggregate sublimit of
availability in Canadian Dollars, British Pound Sterling and Euros. There were
no borrowings outstanding under the Existing Credit Facility at the time of its
termination.
Under the New Revolving Credit Facility, which is scheduled to mature in
November 2027, the Company has a revolving line of credit available of up to
$4.0 billion and a $3.6 billion aggregate sublimit of availability in Canadian
Dollars, British Pound Sterling and Euros, which is subject to increase as
provided for therein. The New Revolving Credit Facility requires that the
Company maintain a total debt to Consolidated EBITDA ratio of no greater than
4.00x to 1.00 (with a temporary step-up to 4.50x to 1.00 upon election by the
Company after the consummation of an acquisition involving payment of cash
consideration of at least $500 million). The remaining terms and conditions of
the New Revolving Credit Facility are substantially similar to those previously
in place under the Existing Credit Facility. The New Revolving Credit Facility
also permits the Company to establish Key Performance Indicators with respect to
certain Environmental, Social and Governance targets of the Company in
consultation with certain sustainability coordinators, and enter into an
amendment to the New Revolving Credit Facility to provide for certain
adjustments to the otherwise applicable facility fee and margins.
Borrowings under the New Revolving Credit Facility bear interest based upon Term
SOFR for credit extensions denominated in US Dollars, the Sterling Overnight
Index Average Reference Rate for credit extensions denominated in British Pound
Sterling, the Euro Interbank Offered Rate for credit extensions denominated in
Euros and the Canadian Dealer Offered Rate for credit extensions denominated in
Canadian Dollars, a prime rate or alternative overnight rates as applicable plus
agreed margins. In the case of an event of default under the New Revolving
Credit Facility, the lenders may elect, among other things, to declare any
unpaid amounts obtained under the New Revolving Credit Facility to be
immediately due and payable.
New Term Loan Credit Facility
On November 7, 2022, the Company also entered into a Credit Agreement (the "New
Term Loan Credit Facility"), among the Company, as borrower, the lenders party
thereto, Toronto Dominion (Texas) LLC, as administrative agent and the other
parties thereto. Under the New Term Loan Credit Facility, which is scheduled to
mature in November 2025, the Company has an unsecured delayed draw term loan
facility up to $500 million which is available for borrowing for 90 days after
the closing date in up to three separate borrowings, and which is subject to
increase as provided for therein. The New Term Loan Credit Facility requires
that the Company maintain a total debt to Consolidated EBITDA ratio of no
greater than 4.00x to 1.00 (with a temporary step-up to 4.50x to 1.00 upon
election by the Company after the consummation of an acquisition involving
payment of cash consideration of at least $500 million). The remaining terms and
conditions of the New Term Loan Credit Facility are substantially similar to
those under the Existing Credit Facility. Borrowings under the New Term Loan
Credit Facility bear interest based upon Term SOFR, a prime rate or alternative
overnight rates as applicable plus agreed margins. In the case of event of
default under the New Term Credit Facility, the lenders may elect, among other
things, to declare any unpaid amounts obtained under the New Term Credit
Facility to be immediately due and payable.
The Company can use funds obtained under the New Revolving Credit Facility and
New Term Loan Credit Facility for general corporate purposes.
In the ordinary course of their respective businesses, the lenders under the New
Revolving Credit Facility, the New Term Loan Credit Facility and their
affiliates have engaged, and may in the future engage, in commercial banking
and/or investment banking transactions with the Company and its affiliates.
The above description of the New Revolving Credit Facility and the New Term Loan
Credit Facility does not purport to be complete and is qualified in its entirety
by reference to the executed copies of the New Revolving Credit Facility and the
New Term Loan Credit Facility, which are attached hereto as Exhibits 10.1 and
10.2, respectively, and are incorporated herein by reference.
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Item 1.02 Termination of a Material Definitive Agreement.
The information in Item 1.01 above is hereby incorporated by reference into this
Item 1.02.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The information in Item 1.01 above is hereby incorporated by reference into this
Item 2.03.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. Description
10.1 Credit Agreement, dated as of November 7, 2022, among the Company, as
borrower, the lenders party thereto, the letter of credit issuers party
thereto, Bank of America, N.A., as administrative agent, and the other
parties thereto
10.2 Credit Agreement, dated as of November 7, 2022, among the Company, as
borrower, the lenders party thereto, Toronto Dominion (Texas) LLC, as
administrative agent and the other parties thereto
10.4 Cover Page Interactive Data File - the cover page iXBRL tags are embedded
within the Inline XBRL document
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