Cencora Inc. filed SEC Form 8-K: Entry into a Material Definitive Agreement, Creation of a Direct Financial Obligation, Financial Statements and Exhibits
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Item 1.01. Entry into a Material Definitive Agreement.
Term Loan Facility for Proposed Acquisition of Retina Consultants of America
On November 26, 2024, Cencora, Inc., a Delaware corporation (the “Company”), entered into a Term Credit Agreement, among the Company, the lenders party thereto and Bank of America, N.A., as administrative agent (the “Term Credit Agreement”). The Company entered into the Term Credit Agreement in connection with the previously announced proposed acquisition (the “Acquisition”) of Retina Consultants of America. The Term Credit Agreement provides for a senior unsecured term facility of $1.5 billion (the “Term Loan”), which matures three years from the date on which the Term Loan is drawn under the Term Credit Agreement (such date on which the Acquisition is consummated and the Term Loan is drawn, the “Closing Date”). The proceeds of the Term Loan will be used to pay a portion of the cash consideration in respect of the Acquisition and to pay fees and expenses incurred in connection with the Acquisition. The funding under the Term Credit Agreement is subject to closing conditions, including the consummation of the Acquisition.
The Term Loan will bear interest at a rate equal to either an adjusted Term SOFR rate plus an applicable margin or an alternate base rate plus an applicable margin, in each case based on the Company’s public debt ratings by Standard & Poor’s Ratings Services, Moody’s Investors Service, Inc. and Fitch, Inc. Such applicable margins range from 87.5 basis points to 137.5 basis points over the adjusted Term SOFR rate and 0 basis points to 37.5 basis points over the alternate base rate, in each case, as determined in accordance with the provisions of the Term Credit Agreement. In addition, commencing on March 5, 2025, an undrawn commitment fee will begin to accrue on the aggregate amount of unused commitments under the Term Credit Agreement. The Company has the right to prepay the Term Loan at any time, in whole or in part and without premium or penalty (other than, if applicable, any breakage costs). The Company may also choose to reduce its commitments under the Term Loan at any time.
The Term Credit Agreement contains certain affirmative and negative covenants, and includes limitations on indebtedness of subsidiaries, liens, fundamental changes, asset sales and a covenant requiring compliance with a financial leverage ratio not to exceed 3.75 to 1.00 as of the last day of any fiscal quarter (which may be increased to 4.00 to 1.00 at the Company’s election as of the last day of the fiscal quarter during which the Closing Date occurs). The covenants contained in the Term Credit Agreement are substantially similar to the covenants contained in the Company’s existing $2.4 billion multi-currency senior unsecured revolving credit facility (the “Existing Revolving Credit Facility”). The Term Credit Agreement also contains customary events of default (which are in some cases subject to certain exceptions, thresholds and grace periods) including, but not limited to, nonpayment of principal and interest, failure to perform or observe covenants, breaches of representations and warranties and certain bankruptcy-related events.
As previously disclosed, in connection with the Acquisition, the Company obtained $3.3 billion in bridge financing commitments to fund the cash purchase price of the Acquisition. As a result of entering into the Term Credit Agreement, such bridge financing commitments have been automatically reduced by $1.5 billion, which is the amount of the commitments under the Term Credit Agreement, to $1.8 billion.
The foregoing description of the Term Credit Agreement does not purport to be complete and is qualified in its entirety by reference to the Term Credit Agreement, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated by reference herein.
364-Day Revolving Credit Facility
On November 26, 2024, the Company entered into a Credit Agreement (the “Credit Agreement”), among the Company, the lenders party thereto and Bank of America, N.A., as administrative agent, pursuant to which the Company obtained a $1.0 billion senior unsecured revolving credit facility (the “Revolving Credit Facility”).
Borrowings under the Revolving Credit Facility will be available on and after the Closing Date and will mature on the date that is 364 days after the Closing Date (the “Revolving Facility Maturity Date”). Borrowings outstanding on the Revolving Facility Maturity Date will mature and be payable on such date, or, at the option of the Company, on the first anniversary of the Revolving Facility Maturity Date. The Company’s option to extend the maturity of any borrowings outstanding on the Revolving Facility Maturity Date is subject to customary conditions and the payment of an extension fee on such outstanding borrowings.
Interest on borrowings under the Revolving Credit Facility will accrue at a rate equal to either an adjusted Term SOFR rate plus an applicable margin or an alternate base rate plus an applicable margin, in each case based on the Company’s public debt ratings by Standard & Poor’s Ratings Services, Moody’s Investors Service, Inc. and Fitch, Inc. Such applicable margins range from 87.5 basis points to 137.5 basis points over the adjusted Term SOFR rate and 0 basis points to 37.5 basis points over the alternate base rate, in each case, as determined in accordance with the provisions of the Credit Agreement. The Company has agreed to pay facility fees to maintain the availability under the Revolving Credit Facility at specified rates based on its public debt ratings, ranging from 5.0 basis points to 12.5 basis points, annually, of the total commitments of the lenders thereunder. The Company has the right to prepay borrowings under the Revolving Credit Facility at any time, in whole or in part and without premium or penalty (other than, if applicable, any breakage costs), provided that the amount of any such prepayment meets certain minimum thresholds. The Company may also choose to reduce its commitments under the Revolving Credit Facility at any time.
The Company may use the funds provided under the Revolving Credit Facility for general corporate purposes of the Company and its subsidiaries. The Revolving Credit Facility contains affirmative and negative covenants that are substantially similar to those contained in the Existing Revolving Credit Facility and the Term Credit Agreement, including limitations on indebtedness of subsidiaries, liens, fundamental changes, asset sales and a covenant requiring compliance with a financial leverage ratio not to exceed 3.75 to 1.00 as of the last day of any fiscal quarter (which may be increased to 4.00 to 1.00 at the Company’s election as of the last day of the fiscal quarter during which the Closing Date occurs). The Revolving Credit Facility contains certain representations, warranties and events of default (which are, in some cases, subject to certain exceptions, thresholds and grace periods) including, but not limited to, non-payment of principal and interest, failure to perform or observe covenants, breaches of representations and warranties and certain bankruptcy-related events.
The foregoing description of the Revolving Credit Facility does not purport to be complete and is qualified in its entirety by reference to the Credit Agreement, which is filed as Exhibit 10.2 to this Current Report on Form 8-K and is incorporated by reference herein.
Certain of the lenders under the Revolving Credit Facility and the Term Credit Agreement, and their affiliates, have various relationships with the Company and have in the past provided, and may in the future provide, investment banking, commercial banking, derivative transactions and financial advisory services to the Company and its affiliates in the ordinary course of business for which they have received and may continue to receive fees and commissions. In particular, BofA Securities, Inc., an affiliate of Bank of America, N.A., Citigroup Global Markets Inc., an affiliate of Citibank, N.A., J.P. Morgan Securities LLC, an affiliate of JPMorgan Chase Bank, N.A., Wells Fargo Securities, LLC, an affiliate of Wells Fargo Bank, N.A., and BNP Paribas Securities Corp., an affiliate of BNP Paribas, have served as joint book-running managers, and certain affiliates of the other lenders have served as underwriters, in connection with past senior note offerings by the Company, and such affiliates may serve similar roles in future securities offerings by the Company. In addition, certain of the lenders serve various roles in connection with a $1.45 billion receivables securitization facility to which the Company’s subsidiaries, AmerisourceBergen Drug Corporation, ASD Specialty Healthcare, LLC, and Amerisource Receivables Financial Corporation (“ARFC”), are a party and pursuant to which accounts receivables are sold on a revolving basis to ARFC, a special purpose entity. MUFG Bank, Ltd. serves as administrator and a purchaser under the program. Certain of the other lenders or their affiliates also serve as lenders or purchasers under the securitization facility. Furthermore, certain of the lenders serve various roles in connection with the Existing Revolving Credit Facility. Specifically, JPMorgan Chase Bank, N.A. serves as administrative agent under the Existing Revolving Credit Facility and certain of the other lenders or their affiliates also serve as lenders under the Existing Revolving Credit Facility.
Item 2.03. Creation of Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information set forth 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 Number |
Description |
| 10.1 | Term Credit Agreement, dated as of November 26, 2024, among Cencora, Inc., the lenders party thereto and Bank of America, N.A., as Administrative Agent. |
| 10.2 | Credit Agreement, dated as of November 26, 2024, among Cencora, Inc., the lenders party thereto and Bank of America, N.A., as Administrative Agent. |
| 104 | Cover Page Interactive Data File (formatted as inline XBRL) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Cencora, Inc. | ||
| November 27, 2024 | By: | /s/ James F. Cleary |
| Name: | James F. Cleary | |
| Title: | Executive Vice President and Chief Financial Officer | |