Cigna 2011 Annual Report Download - page 160

FS-8 CIGNA CORPORATION2011 Form10K
PART IV
ITEM 15 Exhibits and Financial Statement Schedules
e Company may redeem these Notes, at any time, in whole or in
part, at a redemption price equal to the greater of:
•100% of the principal amount of the Notesto be redeemed; or
•
the present value of the remaining principal and interest payments
on the Notesbeing redeemed discounted at the applicable Treasury
Rate plus 30 basis points (5-Year 2.75% Notesdue 2016), 35 basis
points (10-Year 4% Notesdue 2022), or 40 basis points (30-Year
5.375% Notesdue 2042).
In June2011, the Company entered into a new ve-year revolving
credit and letter of credit agreement for $1.5billion, which permits
up to $500million to be used for letters of credit. is agreement is
diversied among 16 banks, with 3 banks each having 12% of the
commitment and the remaining 13 banks with 64% of the commitment.
e credit agreement includes options that are subject to consent
by the administrative agent and the committing banks, to increase
the commitment amount to $2billion and to extend the term past
June2016. e credit agreement is available for general corporate
purposes, including as a commercial paper backstop and for the
issuance of letters of credit. is agreement includes certain covenants,
including a nancial covenant requiring the Company to maintain
a total debt to adjusted capital ratio at or below 0.50 to 1.00. As of
December31,2011, the Company had $4billion of borrowing capacity
within the maximum debt coverage covenant in the agreement in
addition to the $5.1billion of debt outstanding. ere were letters of
credit of $118million issued as of December31,2011.
In March2011, the Company issued $300million of 10-Year Notesdue
March15,2021 at a stated interest rate of 4.5% ($298million, net
of discount, with an eective interest rate of 4.683% per year) and
$300million of 30-Year Notesdue March15,2041 at a stated interest
rate of 5.875% ($298million, net of discount, with an eective
interest rate of 6.008% per year). Interest is payable on March15 and
September15 of each year beginning September15,2011. e proceeds
of this debt were used for general corporate purposes, including the
repayment of debt maturing in 2011.
e Company may redeem these Notes, at any time, in whole or in
part, at a redemption price equal to the greater of:
•100% of the principal amount of the Notesto be redeemed; or
•
the present value of the remaining principal and interest payments
on the Notesbeing redeemed discounted at the applicable Treasury
Rate plus 20 basis points (10-Year 4.5% Notesdue 2021) or 25 basis
points (30-Year 5.875% Notesdue 2041).
During 2011, the Company repaid $449million in maturing long-
term debt.
In the fourth quarter of 2010, the Company entered into the following
transactions related to its long-term debt:
•
In December2010 the Company oered to settle its 8.5% Notesdue
2019, including accrued interest from November1 through the
settlement date. e tender price equaled the present value of the
remaining principal and interest payments on the Notesbeing
redeemed, discounted at a rate equal to the 10-year Treasury Rate
plus a xed spread of 100 basis points. e tender oer priced at
a yield of 4.128% and principal of $99million was tendered, with
$251million remaining outstanding. e Company paid $130million,
including accrued interest and expenses, to settle the Notes, resulting
in an after-tax loss on early debt extinguishment of $21million.
•
In December2010 the Company oered to settle its 6.35% Notesdue
2018, including accrued interest from September16 through the
settlement date. e tender price equaled the present value of the
remaining principal and interest payments on the Notesbeing
redeemed, discounted at a rate equal to the 10-year Treasury Rate
plus a xed spread of 45 basis points. e tender oer priced at a
yield of 3.923% and principal of $169million was tendered, with
$131million remaining outstanding. e Company paid $198million,
including accrued interest and expenses, to settle the Notes, resulting
in an after-tax loss on early debt extinguishment of $18million.
•
In December2010, the Company issued $250million of 4.375%
Notes($249million net of debt discount, with an eective interest
rate of 5.1%). e dierence between the stated and eective interest
rates primarily reects the eect of treasury locks. Interest is payable on
June15 and December15 of each year beginning December15,2010.
ese Noteswill mature on December15,2020. e proceeds of this
debt were used to fund the tender oer for the 8.5% Senior Notesdue
2019 and the 6.35% Senior Notesdue 2018 described above.
In May2010, the Company issued $300million of 5.125%
Notes($299million, net of debt discount, with an eective interest
rate of 5.36% per year). Interest is payable on June15 and December15
of each year beginning December15,2010. ese Noteswill mature
on June15,2020. e proceeds of this debt were used for general
corporate purposes.
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