| Item 2.03 | Creation of a Direct Financial Obligation or an Obligation under anOff-Balance Sheet Arrangement of a Registrant. |
The information set forth in Item 8.01 regarding the Notes (as defined below) is incorporated herein by reference.
On November 28, 2018, McKesson Corporation (the “Company”) entered into an Underwriting Agreement (the “Underwriting Agreement”) with the several underwriters named therein (the “Underwriters”), pursuant to which the Company agreed to issue and sell to the Underwriters $700,000,000 aggregate principal amount of its 3.650% Notes due 2020 (the “2020 Notes”) and $400,000,000 aggregate principal amount of its 4.750% Notes due 2029 (the “2029 Notes” and, together with the 2020 Notes, the “Notes”). On November 30, 2018, the Notes were issued pursuant to the Indenture, dated as of December 4, 2012 (the “Indenture”) between the Company and Wells Fargo Bank, National Association, as trustee (the “Trustee”), as supplemented by an Officer’s Certificate, dated as of November 30, 2018, setting forth certain terms of the Notes (the “Officer’s Certificate”).
The 2020 Notes will bear interest at the rate of 3.650% per year. The 2029 Notes will bear interest at the rate of 4.750% per year. Interest on the Notes is payable on May 30 and November 30 of each year, beginning on May 30, 2019.
Upon at least 15 days’ and not more than 45 days’ notice to holders of the Notes, the Company may redeem either series of the Notes for cash in whole, at any time, or in part, from time to time, prior to maturity, at redemption prices that include accrued and unpaid interest and a make-whole premium, as specified in the Indenture and the Officer’s Certificate. The Indenture and the Officer’s Certificate include certain covenants, including limitations on the Company’s ability to create certain liens on its assets or enter into sale and leaseback transactions with respect to its properties, or consolidate, merge or sell all or substantially all of its assets, subject to a number of important exceptions as specified in the Indenture. The Notes are unsecured and unsubordinated obligations of the Company and rank equally with all of the Company’s existing and future unsecured and unsubordinated indebtedness from time to time outstanding. The Indenture contains customary event of default provisions. In the event of the occurrence of both (1) a change of control of the Company and (2) a downgrade of a series of Notes below an investment grade rating by each of the Ratings Agencies (as defined in the Officer’s Certificate) within a specified period, unless the Company has previously exercised its optional redemption right with respect to the applicable series of Notes in whole, the Company will be required to offer to repurchase such Notes from the holders at a price in cash equal to 101% of the then outstanding principal amount of such Notes, plus accrued and unpaid interest to, but not including, the date of repurchase.
The public offering price of the 2020 Notes was 99.954% of the principal amount and the public offering price of the 2029 Notes was 99.704% of the principal amount. The Company expects to receive approximately $1.092 billion in aggregate net proceeds from the offering of the Notes, after estimated expenses. The Company expects to use the net proceeds from this offering for general corporate purposes, which may include, among other things, the repayment of debt.
The Notes were offered and sold pursuant to the Company’s automatic shelf registration statement on FormS-3 (RegistrationNo. 333-215763) under the Securities Act of 1933, as amended. The Company has filed with the Securities and Exchange Commission (the “SEC”) a prospectus supplement, dated November 28, 2018, together with the accompanying prospectus, dated January 27, 2017.
For a complete description of the terms and conditions of the Officer’s Certificate, the Notes and the Underwriting Agreement, please refer to the Officer’s Certificate and the form of 2020 Note, the form of 2029 Note and the Underwriting Agreement, which are incorporated herein by reference and attached to this Current Report on Form8-K as Exhibits 4.1, 4.2, 4.3 and 99.1, respectively.
In reviewing the agreements included as exhibits to this Current Report on Form8-K, note that they are included to provide you with information regarding their terms and are not intended to provide any other factual or disclosure information about the Company or the other parties to the agreements. The agreements may contain representations and warranties by each of the parties to the applicable agreement. Those representations and warranties have been made solely for the benefit of the other parties to the applicable agreement and:
| | • | | should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate; |
| | • | | may have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures would not necessarily be reflected in the agreement; |
