Cardinal Health, Inc. (CAH, Financial) has announced a significant financial development with the entry into a 364-Day Credit Agreement, effective October 8, 2024. This agreement, established with Bank of America, N.A. as the Administrative Agent, provides Cardinal Health access to a revolving credit facility of $1.0 billion, available through October 7, 2025. The agreement allows the company to convert any outstanding loans into non-revolving term loans upon the termination date, with a repayment period extending one year beyond this date.
The interest rates for borrowings under this Credit Agreement will be determined based on prevailing market rates, specifically benchmarked against Term SOFR, and will be influenced by Cardinal Health's credit ratings. The agreement includes customary covenants, such as restrictions on incurring additional liens and subsidiary indebtedness, and mandates a Consolidated Net Leverage Ratio of no greater than 3.75 to 1.00 as of the last day of any fiscal quarter.
In addition to the credit agreement, Cardinal Health has amended its Issuing and Paying Agency Agreement with The Bank of New York Mellon. This amendment increases the maximum principal amount of commercial paper notes from $2.0 billion to $3.0 billion, enhancing the company's capacity to manage its short-term financing needs.
These strategic financial arrangements are designed to support Cardinal Health's general corporate purposes and back its commercial paper program, providing the company with increased liquidity and financial flexibility. The company continues to engage with various financial institutions for services such as lending, commercial banking, and investment banking, ensuring robust financial management and advisory support.
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