CNC Centene Corp

Item 1.01.

Entry into a Material Definitive Agreement.

 

On August 16, 2021 (the “Effective Date”), Centene Corporation, a Delaware corporation (“Centene”), amended and restated its existing credit agreement (the existing credit agreement, the “Existing Credit Agreement” and, as amended and restated, the “A&R Credit Agreement”) by and among Centene, Wells Fargo Bank, National Association, as administrative agent, and the lenders and other parties thereto. The Existing Credit Agreement was amended and restated to, among other things, (i) extend the various maturities under the Existing Credit Agreement until 2026, (ii) increase the aggregate principal amount of the U.S. dollar unsecured term loan facility under the Existing Credit Agreement (the “Term Loan Facility”) from $1.45 billion to $2.2 billion, (iii) increase the maximum total net leverage ratio permitted under the total debt to EBITDA financial covenant from 3.50:1.00 to 4.00:1.00, (iv) reduce the applicable margin with respect to borrowings to between 1.50% to 1.125%, based on the total debt to EBITDA ratio and (v) include scheduled amortization payments with respect to the Term Loan Facility equal to 0.0% for the first year following closing, 2.5% for the second year following closing and 5% thereafter until maturity.

 

Centene made a single drawing under the Term Loan Facility on the Effective Date and the proceeds of the thereof were used for, among other things, to (i) fund the redemption of the 5.375% Senior Notes of the Company due 2026 and the 5.375% Senior Notes of WellCare Health Plans, Inc. due 2026 and pay fees and expenses in connection therewith, (ii) refinance the outstanding term loans under the Existing Credit Agreement, (iii) pay related fees and expenses and (iv) general corporate purposes.  The existing $2.0 billion unsecured multi-currency revolving credit facility (the “Revolving Credit Facility”) shall remain in place under the A&R Credit Agreement. Centene made a borrowing under the Revolving Credit Facility on the Effective Date for the purposes of refinancing the outstanding revolving loans under the Existing Credit Agreement.

 

The loans under the Term Loan Facility are subject to mandatory prepayment with (i) the net cash proceeds of certain debt incurred or issued by Centene and (ii) subject to customary reinvestment rights, the net cash proceeds of certain asset sales, insurance and condemnation events and other dispositions.

 

The A&R Credit Agreement contains financial covenants, including a minimum fixed charge coverage ratio and a maximum total debt-to-EBITDA ratio. The A&R Credit Agreement also contains customary covenants that restrict Centene and its subsidiaries in respect of, among other things, mergers and consolidations, sales of all or substantially all of its assets, the incurrence of debt and liens, change in the nature of its business, transactions with affiliates and the making of certain investments and restricted payments. The A&R Credit Agreement is subject to acceleration upon the occurrence of an event of default, which includes, among others things, cross-default with regard to indebtedness of Centene or its subsidiaries in excess of $500 million in the aggregate; cross-default with regard to Centene’s outstanding notes; the occurrence of a change of control (as defined in the A&R Credit Agreement); entry of judgment or order to pay of $500 million or more which is not stayed or paid; the occurrence of certain bankruptcy events; failure to make payments under the A&R Credit Agreement when due; breach of representations and warranties or covenants under the A&R Credit Agreement; and invalidity of loan documents.

 

A copy of the A&R Credit Agreement is attached hereto as Exhibit 1.1 to this Form 8-K and is incorporated herein by reference. The above description of the material terms of the A&R Credit Agreement does not purport to be complete and is qualified in its entirety by reference to such Exhibit.