MOLINA HEALTHCARE, INC. (NYSE:MOH) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01. Entry into a Material Definitive Agreement.
4.875% Senior Notes due 2025
On June 6, 2017 (the Settlement Date), Molina Healthcare, Inc., a
Delaware corporation (the Company), completed the private
offering of $330.0 million aggregate principal amount of its
4.875% Senior Notes due 2025 (the Notes) to an indenture, dated
as of the Settlement Date, by and among the Company, the
guarantors party thereto and U.S. Bank National Association, as
trustee, in the form attached hereto as Exhibit 4.1 to this
Current Report on Form 8-K (the Indenture).
Delaware corporation (the Company), completed the private
offering of $330.0 million aggregate principal amount of its
4.875% Senior Notes due 2025 (the Notes) to an indenture, dated
as of the Settlement Date, by and among the Company, the
guarantors party thereto and U.S. Bank National Association, as
trustee, in the form attached hereto as Exhibit 4.1 to this
Current Report on Form 8-K (the Indenture).
The following is a brief description of the terms of the Notes
and the Indenture.
and the Indenture.
Interest and Maturity
The Notes will bear interest at the rate of 4.875% per year.
Interest will be payable semi-annually in arrears on June 15 and
December 15 of each year, commencing December 15, 2017. Interest
will accrue from the Settlement Date. The Notes will mature on
June 15, 2025.
Interest will be payable semi-annually in arrears on June 15 and
December 15 of each year, commencing December 15, 2017. Interest
will accrue from the Settlement Date. The Notes will mature on
June 15, 2025.
Guarantees
The Notes will be guaranteed by each of the Companys existing and
future direct and indirect domestic unregulated subsidiaries that
guarantee the Companys existing revolving credit facility. As of
the date of this Current Report on Form 8-K, the only
subsidiaries of the Company that have guaranteed the Notes are
Molina Information Systems, LLC, Molina Pathways, LLC, and
Pathways Health and Community Support LLC. None of the Companys
other subsidiaries, including its health plan subsidiaries, will
guarantee the Notes and the Notes will be structurally
subordinated to all of the liabilities of such subsidiaries.
future direct and indirect domestic unregulated subsidiaries that
guarantee the Companys existing revolving credit facility. As of
the date of this Current Report on Form 8-K, the only
subsidiaries of the Company that have guaranteed the Notes are
Molina Information Systems, LLC, Molina Pathways, LLC, and
Pathways Health and Community Support LLC. None of the Companys
other subsidiaries, including its health plan subsidiaries, will
guarantee the Notes and the Notes will be structurally
subordinated to all of the liabilities of such subsidiaries.
Ranking
The Notes and the guarantees described above will be senior
unsecured obligations of the Company and the guarantors,
respectively, and will rank pari passu>in right of payment
with all existing and future senior debt and senior to all
existing and future subordinated debt of the Company and the
guarantors. The Notes and the guarantees will be effectively
subordinated to all existing and future secured debt of the
Company and the guarantors to the extent of the value of the
assets securing such debt. In addition, the Notes and the
guarantees will be structurally subordinated to all indebtedness
and other liabilities and preferred stock of the Companys
subsidiaries that do not guarantee the Notes.
unsecured obligations of the Company and the guarantors,
respectively, and will rank pari passu>in right of payment
with all existing and future senior debt and senior to all
existing and future subordinated debt of the Company and the
guarantors. The Notes and the guarantees will be effectively
subordinated to all existing and future secured debt of the
Company and the guarantors to the extent of the value of the
assets securing such debt. In addition, the Notes and the
guarantees will be structurally subordinated to all indebtedness
and other liabilities and preferred stock of the Companys
subsidiaries that do not guarantee the Notes.
Optional Redemption
The Notes will be redeemable on and after June 15, 2020 at the
redemption prices specified in the Indenture plus accrued and
unpaid interest, if any, to, but not including, the redemption
date. In addition, the Company may redeem up to 40% of the Notes
prior to June 15, 2020 with the net cash proceeds of certain
equity offerings at the redemption prices specified in the
Indenture plus accrued and unpaid interest, if any, to, but not
including, the redemption date. The Company may also redeem some
or all of the Notes prior to June 15, 2020 at a redemption price
equal to 50% of the principal amount of the Notes redeemed plus
accrued and unpaid interest, if any, to, but not including, the
redemption date, plus an applicable make-whole premium.
redemption prices specified in the Indenture plus accrued and
unpaid interest, if any, to, but not including, the redemption
date. In addition, the Company may redeem up to 40% of the Notes
prior to June 15, 2020 with the net cash proceeds of certain
equity offerings at the redemption prices specified in the
Indenture plus accrued and unpaid interest, if any, to, but not
including, the redemption date. The Company may also redeem some
or all of the Notes prior to June 15, 2020 at a redemption price
equal to 50% of the principal amount of the Notes redeemed plus
accrued and unpaid interest, if any, to, but not including, the
redemption date, plus an applicable make-whole premium.
Covenants
The Indenture governing the Notes limits the Companys and its
subsidiaries ability to, among other things:
subsidiaries ability to, among other things:
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create certain liens;
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enter into sale and lease-back transactions;
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issue, assume or guarantee indebtedness for money borrowed
that is secured by a lien on certain of the Companys principal property (or on any shares of capital stock of the Companys subsidiaries that own such principal property) without securing the notes on a pari passu>basis; |
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use the net proceeds from the sale of the Notes other than
as set forth below under the caption “Use of Proceeds”; and |
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consolidate with or merge with or into, or sell, transfer,
convey or lease all or substantially all of the Companys or its subsidiaries properties and assets, taken as a whole, to another person. |
No Registration Rights
The Company will not be required to, nor does it intend to,
register the Notes for resale under the Securities Act of 1933,
as amended, or the securities laws of any other jurisdiction.
register the Notes for resale under the Securities Act of 1933,
as amended, or the securities laws of any other jurisdiction.
Use of Proceeds
After deducting fees and expenses payable by the Company, the net
proceeds from the issuance and sale of the Notes is $325,175,000
(the Net Proceeds). The Net Proceeds have been deposited into a
newly-formed segregated deposit account in the Companys name, and
such Net Proceeds will be invested (and may be reinvested) in
cash and cash equivalents. Amounts contained in such account will
be used by the Company (i) on or prior to August 20, 2018, to (a)
redeem, repurchase, repay, tender for, or acquire or retire for
value (whether through one or more tender offers, open market
repurchases, redemptions or similar transactions) all or any
portion of the Companys 1.625% Convertible Senior Notes due 2044
(the 1.625% Convertible Notes) or to satisfy the cash portion of
any consideration due upon any conversion of the 1.625%
Convertible Notes to the requirements contained in the indenture
governing the 1.625% Convertible Notes, and/or (b) make any
interest payments due on all or any portion of the Notes, (ii) on
or after August 20, 2018, to repurchase all or any portion of the
1.625% Convertible Notes that the Company is obligated to
repurchase to the requirements contained in the indenture
governing the 1.625% Convertible Notes and (iii) subsequent to
August 20, 2018 (or such earlier date in the event that there are
no longer any 1.625% Convertible Notes outstanding), in any other
manner not otherwise prohibited by the indenture governing the
Notes, subject to the Company complying with clauses (i) or (ii)
prior to any such amounts being used or applied in accordance
with this clause (iii). For payments made to the foregoing
clauses (i) or, to the extent applicable, (ii), amounts permitted
to be released from the segregated account shall include amounts
necessary to pay principal, any accrued and unpaid interest due
on the date of any redemption, repurchase, repayment, tender,
acquisition or retirement for value or to satisfy the cash
portion of any consideration due upon any conversion of the
1.625% Convertible Notes, premiums (including tender premiums)
and fees and expenses incurred in connection therewith. The funds
deposited into the above-referenced segregated deposit account
will initially be classified as non-current assets on the
Companys consolidated balance sheet.
proceeds from the issuance and sale of the Notes is $325,175,000
(the Net Proceeds). The Net Proceeds have been deposited into a
newly-formed segregated deposit account in the Companys name, and
such Net Proceeds will be invested (and may be reinvested) in
cash and cash equivalents. Amounts contained in such account will
be used by the Company (i) on or prior to August 20, 2018, to (a)
redeem, repurchase, repay, tender for, or acquire or retire for
value (whether through one or more tender offers, open market
repurchases, redemptions or similar transactions) all or any
portion of the Companys 1.625% Convertible Senior Notes due 2044
(the 1.625% Convertible Notes) or to satisfy the cash portion of
any consideration due upon any conversion of the 1.625%
Convertible Notes to the requirements contained in the indenture
governing the 1.625% Convertible Notes, and/or (b) make any
interest payments due on all or any portion of the Notes, (ii) on
or after August 20, 2018, to repurchase all or any portion of the
1.625% Convertible Notes that the Company is obligated to
repurchase to the requirements contained in the indenture
governing the 1.625% Convertible Notes and (iii) subsequent to
August 20, 2018 (or such earlier date in the event that there are
no longer any 1.625% Convertible Notes outstanding), in any other
manner not otherwise prohibited by the indenture governing the
Notes, subject to the Company complying with clauses (i) or (ii)
prior to any such amounts being used or applied in accordance
with this clause (iii). For payments made to the foregoing
clauses (i) or, to the extent applicable, (ii), amounts permitted
to be released from the segregated account shall include amounts
necessary to pay principal, any accrued and unpaid interest due
on the date of any redemption, repurchase, repayment, tender,
acquisition or retirement for value or to satisfy the cash
portion of any consideration due upon any conversion of the
1.625% Convertible Notes, premiums (including tender premiums)
and fees and expenses incurred in connection therewith. The funds
deposited into the above-referenced segregated deposit account
will initially be classified as non-current assets on the
Companys consolidated balance sheet.
Events of Default
The Indenture provides for customary events of default, including
cross acceleration to certain other indebtedness of the Company
and its unregulated subsidiaries.
cross acceleration to certain other indebtedness of the Company
and its unregulated subsidiaries.
The foregoing description of the Indenture and the Notes does not
purport to be complete and is qualified in its entirety by
reference to the Indenture, the form of Notes and the form of
Guarantee filed as Exhibits 4.1, 4.2 and 4.3, respectively, to
this Current Report on Form 8-K and are incorporated herein by
reference.
purport to be complete and is qualified in its entirety by
reference to the Indenture, the form of Notes and the form of
Guarantee filed as Exhibits 4.1, 4.2 and 4.3, respectively, to
this Current Report on Form 8-K and are incorporated herein by
reference.
Item 2.03. Creation of a Direct Financial Obligation or an
Obligation under an Off-Balance Sheet Arrangement of a
Registrant.
Obligation under an Off-Balance Sheet Arrangement of a
Registrant.
The information set forth in Item 1.01 of this Current Report on
Form 8-K with respect to the Notes and the Indenture is
incorporated herein by reference into this Item 2.03.
Form 8-K with respect to the Notes and the Indenture is
incorporated herein by reference into this Item 2.03.
Item 8.01. Other Events.
On the Settlement Date, the Company issued a press release
announcing the closing of the offering of the Notes. The full
text of the press release is attached as Exhibit 99.1.
announcing the closing of the offering of the Notes. The full
text of the press release is attached as Exhibit 99.1.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits:
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Exhibit
No.
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Description
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4.1
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Indenture, dated June 6, 2017, by and among Molina
Healthcare, Inc., the Guarantors party thereto and U.S. Bank National Association, as Trustee. |
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4.2
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Form of Notes (included in Exhibit 4.1).
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4.3
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Form of Guarantees (included in Exhibit 4.1).
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99.1
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Press release of Molina Healthcare, Inc. issued June 6,
2017. |
About MOLINA HEALTHCARE, INC. (NYSE:MOH)
Molina Healthcare, Inc. offers Medicaid-related solutions for low-income families and individuals, and assists government agencies in their administration of the Medicaid program. The Company operates through three segments: Health Plans, Molina Medicaid Solutions and Other. Its Health Plans segment consists of health plans in approximately 10 states and the Commonwealth of Puerto Rico, and its direct delivery business. Its direct delivery business consists of the operation of primary care clinics in various states in which it operates health plans. Its Molina Medicaid Solutions segment provides design, development, implementation (DDI) and business process outsourcing (BPO) solutions to state governments for their Medicaid management information systems (MMIS). The Other segment includes other businesses, such as its Pathways Health and Community Support LLC (Pathways) behavioral health and social services provider.
