ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
On May 7, 2019, Centene Corporation, a Delaware corporation (“
Centene
”),
amended and restated its existing credit agreement (as amended and restated, the “
Credit Agreement
”) by and among Centene, Wells Fargo Bank, National
Association, as administrative agent, and the lenders and other parties thereto. The Credit Agreement provides for a $2.0 billion unsecured multi-currency revolving credit facility (the “
Revolving Credit Facility
”), with a $300 million sub-limit for letters of credit and a $200 million sub-limit for swingline loans. The Credit Agreement allows for additional incremental loans up to the greater of (x)
$500 million and (y) such other amount such that after giving pro forma effect to the incurrence of such amounts and the use of proceeds thereof (assuming that all amounts thereunder are drawn in full but without netting any of the proceeds thereof)
the total debt-to-EBITDA ratio would not exceed 3.50 to 1.00, by way of a new term loan facility or an increase in the revolving commitments, subject to satisfaction of certain conditions.
At Centene’s option, borrowings under the Credit Agreement will bear interest at LIBOR, EURIBOR, CDOR, BBR or base rates plus, in each case, an
applicable margin. Applicable margins for LIBOR, EURIBOR, CDOR and BBR range from 87.5 to 187.5 basis points and applicable margins for base rate loans range from 0.0 to 87.5 basis points, in each case, determined based on Centene’s total
debt-to-EBITDA ratio. Additionally, there is a facility fee ranging from 15 to 27.5 basis points on the commitments of the lenders and a letter of credit fee ranging from 87.5 to 187.5 basis points on letters of credit issued, in each case,
determined based on Centene’s total debt-to-EBITDA ratio. The Revolving Credit Facility will mature on May 7, 2024, unless otherwise extended.
The Credit Agreement contains financial covenants, including a minimum fixed charge coverage ratio and a maximum total debt-to-EBITDA ratio. The
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 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 $300 million in the aggregate; cross-default with regard to Centene’s outstanding notes; the occurrence of a change of control (as defined in the Credit Agreement);
entry of judgment or order to pay of $300 million or more which is not stayed; the occurrence of certain bankruptcy events; failure to make payments under the Credit Agreement when due; breach of representations and warranties or covenants under the
Credit Agreement; and invalidity of loan documents.