WELLCARE HEALTH PLANS, INC. (NYSE:WCG) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01 Entry into a Material Definitive Agreement.>
5.25% Senior Notes due 2025
On March 22, 2017, WellCare Health Plans, Inc. (the Company)
issued 5.25% senior notes due 2025 in the aggregate principal
amount of $1,200,000,000 (the Senior Notes). The Senior Notes
were issued under an indenture, dated as of March 22, 2017 (the
Base Indenture), as supplemented by the First Supplemental
Indenture, dated as of March 22, 2017 (the First Supplemental
Indenture and, together with the Base Indenture, the Indenture),
each between the Company and The Bank of New York Mellon Trust
Company, N.A., as trustee. The Senior Notes were sold in a
registered offering to the Companys registration statement on
Form S-3 (No. 333-207839) filed with the Securities and Exchange
Commission.
issued 5.25% senior notes due 2025 in the aggregate principal
amount of $1,200,000,000 (the Senior Notes). The Senior Notes
were issued under an indenture, dated as of March 22, 2017 (the
Base Indenture), as supplemented by the First Supplemental
Indenture, dated as of March 22, 2017 (the First Supplemental
Indenture and, together with the Base Indenture, the Indenture),
each between the Company and The Bank of New York Mellon Trust
Company, N.A., as trustee. The Senior Notes were sold in a
registered offering to the Companys registration statement on
Form S-3 (No. 333-207839) filed with the Securities and Exchange
Commission.
The Company used a portion of the net proceeds from the offering
to repay in full amounts outstanding under its credit agreement
dated January 8, 2016, among the Company as borrower, JPMorgan
Chase Bank, N.A. as administrative agent and the lenders from
time to time party thereto (the Credit Agreement). The Company
intends to use the remaining net proceeds from the offering to
redeem or repay $900.0 million aggregate principal amount of the
Companys 5.75% Senior Notes due 2020 and to pay related premiums,
accrued interest and fees and expenses associated with such
redemption or repayment, and thereafter for general corporate
purposes, including organic growth and working capital.
to repay in full amounts outstanding under its credit agreement
dated January 8, 2016, among the Company as borrower, JPMorgan
Chase Bank, N.A. as administrative agent and the lenders from
time to time party thereto (the Credit Agreement). The Company
intends to use the remaining net proceeds from the offering to
redeem or repay $900.0 million aggregate principal amount of the
Companys 5.75% Senior Notes due 2020 and to pay related premiums,
accrued interest and fees and expenses associated with such
redemption or repayment, and thereafter for general corporate
purposes, including organic growth and working capital.
The Senior Notes will mature on April 1, 2025, and will bear
interest at a rate of 5.25% per annum. Interest will be computed
on the basis of a 360-day year comprised of twelve 30-day months.
Interest on the Senior Notes will be payable semi-annually on
April 1 and October 1 of each year, commencing on October 1,
2017.
interest at a rate of 5.25% per annum. Interest will be computed
on the basis of a 360-day year comprised of twelve 30-day months.
Interest on the Senior Notes will be payable semi-annually on
April 1 and October 1 of each year, commencing on October 1,
2017.
The following is a brief description of the terms of the Senior
Notes and the Indenture.
Notes and the Indenture.
Ranking>
The Senior Notes will be the Companys senior unsecured
obligations. The Senior Notes will rank equally in right of
payment with all of the Companys existing and future indebtedness
that is not expressly subordinated thereto, senior in right of
payment to any future indebtedness that is expressly subordinated
in right of payment thereto and effectively junior to the
Companys existing and future secured indebtedness to the extent
of the value of the collateral securing such indebtedness. In
addition, the Senior Notes will be structurally subordinated to
all indebtedness and other liabilities of the Companys
subsidiaries (unless the Companys subsidiaries become guarantors
of the Senior Notes).
obligations. The Senior Notes will rank equally in right of
payment with all of the Companys existing and future indebtedness
that is not expressly subordinated thereto, senior in right of
payment to any future indebtedness that is expressly subordinated
in right of payment thereto and effectively junior to the
Companys existing and future secured indebtedness to the extent
of the value of the collateral securing such indebtedness. In
addition, the Senior Notes will be structurally subordinated to
all indebtedness and other liabilities of the Companys
subsidiaries (unless the Companys subsidiaries become guarantors
of the Senior Notes).
Guarantees>
As of the issue date of the Senior Notes, none of the Companys
subsidiaries will guarantee the Senior Notes. In the future, each
of the Companys U.S. subsidiaries that becomes a guarantor of the
Companys other debt will fully and unconditionally guarantee the
Senior Notes on a senior basis, subject to certain exceptions.
subsidiaries will guarantee the Senior Notes. In the future, each
of the Companys U.S. subsidiaries that becomes a guarantor of the
Companys other debt will fully and unconditionally guarantee the
Senior Notes on a senior basis, subject to certain exceptions.
Optional Redemption>
At any time prior to April 1, 2020, the Company may, on any one
or more occasions redeem up to 40% of the aggregate principal
amount of Senior Notes (including any additional Senior Notes,
but excluding Senior Notes held by the Company or its
subsidiaries), upon not less than 30 nor more than 60 days
notice, at a redemption price equal to 105.250% of the principal
amount of the Senior Notes redeemed, plus accrued and unpaid
interest, if any, to, but not including, the applicable date of
redemption (subject to the rights of holders of Senior Notes on
the relevant record date to receive interest due on the relevant
interest payment date), with the net cash proceeds of an equity
offering by the Company; provided that:
or more occasions redeem up to 40% of the aggregate principal
amount of Senior Notes (including any additional Senior Notes,
but excluding Senior Notes held by the Company or its
subsidiaries), upon not less than 30 nor more than 60 days
notice, at a redemption price equal to 105.250% of the principal
amount of the Senior Notes redeemed, plus accrued and unpaid
interest, if any, to, but not including, the applicable date of
redemption (subject to the rights of holders of Senior Notes on
the relevant record date to receive interest due on the relevant
interest payment date), with the net cash proceeds of an equity
offering by the Company; provided that:
(1) at least 60% of the aggregate principal amount of Senior
Notes issued under the Indenture (including any additional Senior
Notes, but excluding Senior Notes held by the Company or its
subsidiaries) remains outstanding immediately after the
occurrence of such redemption; and
Notes issued under the Indenture (including any additional Senior
Notes, but excluding Senior Notes held by the Company or its
subsidiaries) remains outstanding immediately after the
occurrence of such redemption; and
(2) the redemption occurs within 90 days of the date of the
closing of such equity offering.
closing of such equity offering.
At any time prior to April 1, 2020, the Company may on any one
or more occasions redeem all or a part of the Senior Notes,
upon not less than 30 nor more than 60 days notice, at a
redemption price equal to 50% of the principal amount of the
Senior Notes redeemed, plus the Applicable Premium, as defined
in the Indenture, as of, and accrued and unpaid interest, if
any, to, but not including, the applicable date of redemption
(subject to the rights of holders of Senior Notes on the
relevant record date to receive interest due on the relevant
interest payment date).
or more occasions redeem all or a part of the Senior Notes,
upon not less than 30 nor more than 60 days notice, at a
redemption price equal to 50% of the principal amount of the
Senior Notes redeemed, plus the Applicable Premium, as defined
in the Indenture, as of, and accrued and unpaid interest, if
any, to, but not including, the applicable date of redemption
(subject to the rights of holders of Senior Notes on the
relevant record date to receive interest due on the relevant
interest payment date).
Except to the preceding two paragraphs, the Senior Notes will
not be redeemable at the Companys option prior to April 1,
2020.
not be redeemable at the Companys option prior to April 1,
2020.
On or after April 1, 2020, the Company may on any one or more
occasions redeem all or a part of the Senior Notes, upon not
less than 30 nor more than 60 days notice, at the redemption
prices (expressed as percentages of principal amount) set forth
below, plus accrued and unpaid interest, if any, on the Senior
Notes redeemed, to, but not including, the applicable date of
redemption, if redeemed during the twelve-month period
beginning on November 15 of the years indicated below, subject
to the rights of holders of Senior Notes on the relevant record
date to receive interest due on the relevant interest payment
date:
occasions redeem all or a part of the Senior Notes, upon not
less than 30 nor more than 60 days notice, at the redemption
prices (expressed as percentages of principal amount) set forth
below, plus accrued and unpaid interest, if any, on the Senior
Notes redeemed, to, but not including, the applicable date of
redemption, if redeemed during the twelve-month period
beginning on November 15 of the years indicated below, subject
to the rights of holders of Senior Notes on the relevant record
date to receive interest due on the relevant interest payment
date:
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Period
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Redemption Price
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103.938
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%
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102.625
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%
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101.313
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%
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2023 and thereafter
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100.000
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%
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Change of Control>
If the Company experiences certain change of control events, as
defined in the Indenture, the Company must offer to repurchase
the Senior Notes at 101% of the principal amount, plus accrued
and unpaid interest, if any, to, but excluding, the applicable
repurchase date.
defined in the Indenture, the Company must offer to repurchase
the Senior Notes at 101% of the principal amount, plus accrued
and unpaid interest, if any, to, but excluding, the applicable
repurchase date.
Asset Sale>
If the Company sells assets under certain circumstances
described in the Indenture, and subject to certain exceptions,
the Company must offer to repurchase the Senior Notes at 50% of
their principal amount, plus accrued and unpaid interest, if
any, to, but excluding, the applicable repurchase date.
described in the Indenture, and subject to certain exceptions,
the Company must offer to repurchase the Senior Notes at 50% of
their principal amount, plus accrued and unpaid interest, if
any, to, but excluding, the applicable repurchase date.
Covenants>
The Indenture contains covenants that, among other things,
limit the ability of the Company and its restricted
subsidiaries to:
limit the ability of the Company and its restricted
subsidiaries to:
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incur additional indebtedness and issue preferred
stock; |
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pay dividends or make other distributions;
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make other restricted payments and investments;
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sell assets, including capital stock of restricted
subsidiaries; |
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create certain liens;
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incur restrictions on the ability of restricted
subsidiaries to pay dividends or make other payments, and in the case of the Companys subsidiaries, guarantee indebtedness; |
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engage in transactions with affiliates;
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create unrestricted subsidiaries; and
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merge or consolidate with other entities.
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Events of Default>
The Indenture also provides for events of default which, if
any of them occurs, would permit or require the principal of
and accrued interest on, the Senior Notes to become or to be
declared due and payable.
any of them occurs, would permit or require the principal of
and accrued interest on, the Senior Notes to become or to be
declared due and payable.
Credit Agreement
On March 22, 2017, the Company also exercised its option to
increase the amount available under its Credit Agreement from
$850 million to $1.0 billion.
increase the amount available under its Credit Agreement from
$850 million to $1.0 billion.
For a description of the parties rights and obligations under
the Credit Agreement, please see the Companys Current Report
on Form 8-K filed by the Company on January 12, 2016 and the
Credit Agreement attached as Exhibit 10.1 thereto.
the Credit Agreement, please see the Companys Current Report
on Form 8-K filed by the Company on January 12, 2016 and the
Credit Agreement attached as Exhibit 10.1 thereto.
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 is incorporated herein
by reference into this Item 2.03.
by reference into this Item 2.03.
Item 9.01 Financial Statements and Exhibits.>
(d) Exhibits
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Exhibit
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Number
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Description
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4.1
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Base Indenture, dated March 22, 2017, between
WellCare Health Plans, Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee. |
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4.2
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First Supplemental Indenture, dated March 22, 2017,
between WellCare Health Plans, Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee (including the form of 5.25% Senior Note due 2025). |
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5.1
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Opinion of Sullivan Cromwell LLP with respect to
the validity of the Senior Notes. |
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10.1
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Increasing Lender Supplement dated March 22, 2017.
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23.1
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Consent of Sullivan Cromwell LLP (included in
Exhibit 5.1). |
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About WELLCARE HEALTH PLANS, INC. (NYSE:WCG)
WellCare Health Plans, Inc. is a managed care company focused on government-sponsored managed care services, primarily through Medicaid, Medicare Advantage (MA) and Medicare Prescription Drug Plans (PDPs) to families, children, seniors and individuals with complex medical needs. The Company’s segments include Medicaid Health Plans, Medicare Health Plans and Medicare PDPs. The Medicaid Health Plans segment includes plans for beneficiaries of Temporary Assistance for Needy Families, Supplemental Security Income, Aged Blind and Disabled and other state-based programs, such as Children’s Health Insurance Program and Managed Long-Term Care programs. The Medicare program provides health care coverage primarily to individuals age 65 or older, as well as to individuals with certain disabilities. It has contracts with Centers for Medicare & Medicaid Services to serve as a plan sponsor offering Medicare Part D PDP plans to Medicare-eligible beneficiaries through its Medicare PDPs segment. WELLCARE HEALTH PLANS, INC. (NYSE:WCG) Recent Trading Information
WELLCARE HEALTH PLANS, INC. (NYSE:WCG) closed its last trading session down -0.23 at 137.36 with 311,344 shares trading hands.