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McKESSON CORPORATION
FINANCIAL NOTES (Continued)
87
Long-Term Debt
In connection with the acquisition of Celesio, on March 5, 2014, we issued floating rate notes (“Floating Rate Notes”) due
September 10, 2015 in an aggregate principal amount of $400 million, 1.29% notes due March 10, 2017 in an aggregate principal
amount of $700 million (“2017 Notes”), 2.28% notes due March 15, 2019 in an aggregate principal amount of $1,100 million
(“2019 Notes”), 3.80% notes due March 15, 2024 in an aggregate principal amount of $1,100 million (“2024 Notes”) and 4.88%
notes due March 15, 2044 in an aggregate principal amount of $800 million (“2044 Notes”). The Floating Rate Notes bear interest
at a floating rate equal to the three-month London Interbank Offered Rate plus 0.40% (0.64% at March 31, 2014) with interest
payable quarterly on March 10, June 10, September 10 and December 10 of each year, beginning on June 10, 2014. Interest on
the 2017 Notes is payable on March 10 and September 10 of each year, beginning on September 10, 2014. Interest on the 2019
Notes, the 2024 Notes and the 2044 Notes is payable on March 15 and September 15 of each year, beginning on September 15,
2014. We utilized net proceeds, after discounts and offering expenses of $4,068 million from the issuance of these notes (each
note constitutes a “Series”) to repay borrowings under the 2014 Bridge Loan.
On March 8, 2013, we issued 1.40% notes due March 15, 2018 in an aggregate principal amount of $500 million and 2.85%
notes due March 15, 2023 in an aggregate principal amount of $400 million. Interest on these notes is payable on March 15 and
September 15 of each year beginning on September 15, 2013. We utilized net proceeds, after discounts and offering expenses of
$891 million from the issuance of these notes (each note constitutes a “Series”) to repay borrowings under the 2013 Bridge Loan.
On December 4, 2012, we issued 0.95% notes due December 4, 2015 in an aggregate principal amount of $500 million (“2015
Notes”) and 2.70% notes due December 15, 2022 in an aggregate principal amount of $400 million (“2022 Notes”). Interest on
the 2015 Notes is payable on June 4 and December 4 of each year beginning on June 4, 2013 and on the 2022 Notes is payable
on June 15 and December 15 of each year beginning on June 15, 2013. We utilized net proceeds, after discounts and offering
expenses, of $892 million from the issuance of these notes (each note constitutes a “Series”) for general corporate purposes and
replenishing working capital that was used to repay long-term debt that matured.
Each Series constitutes an unsecured and unsubordinated obligation of the Company and ranks equally with all of the
Company’s existing and future unsecured and unsubordinated indebtedness outstanding from time-to-time. Each Series is
governed by materially similar indentures and officers’ certificate specifying certain terms of each Series.
With the exception of the Floating Rate Notes, upon 30 days notice to holders of a Series, we may redeem that Series at any
time prior to maturity, in whole or in part, for cash at redemption prices that include accrued and unpaid interest and a make-whole
premium, as specified in the indenture and officers’ certificate relating to that Series. In the event of the occurrence of both (1) a
change of control of the Company and (2) a downgrade of a Series below an investment grade rating by each of Fitch Ratings,
Moody’s Investors Service, Inc. and Standard & Poor’s Ratings Services within a specified period, an offer must be made to
purchase that Series from the holders at a price in cash equal to 101% of the then outstanding principal amount of that Series, plus
accrued and unpaid interest to, but not including, the date of repurchase. The indenture and the related officers’ certificate for
each Series, subject to the exceptions and in compliance with the conditions as applicable, specify that we may not incur liens,
enter into sale and leaseback transactions or consolidate, merge or sell all or substantially all of our assets. The indentures also
contain customary events of default provisions.
We repaid our $350 million 6.50% Notes due February 15, 2014 and our $500 million 5.25% Notes due March 1, 2013, at
maturity.
Scheduled future payments of long-term debt are $1,424 million in 2015, $1,535 million in 2016, $1,277 million in 2017,
$520 million in 2018, $1,485 million in 2019 and $4,132 million thereafter.