ST. LOUIS, Nov. 1, 2019 /PRNewswire/ -- Centene
Corporation (NYSE:CNC) ("Centene") announced today the
commencement, in connection with its previously announced
acquisition of WellCare Health Plans, Inc. (NYSE:WCG) ("WellCare"),
of exchange offers for any and all outstanding notes set forth in
the table below (the "WellCare Notes") issued by WellCare for up to
$1,950,000,000 aggregate principal
amount of new notes to be issued by Centene (the "Centene Notes")
and cash.
The following table sets forth the Exchange Consideration, Early
Participation Payment and Total Consideration for each series of
the WellCare Notes:
Title of
Series/
CUSIP Number
of WellCare
Corporation
Notes
|
|
Maturity
Date
|
|
Principal
Amount
Outstanding
|
|
Exchange
Consideration(1)
|
|
Early
Participation
Payment(1)
|
|
Total
Consideration
(1)(2)
|
5.25% Senior Notes
due 2025 / 94946TAC0
|
|
4/01/2025
|
|
$1,200,000,000
|
|
$1,000
principal amount of Centene
5.25% Senior Notes due 2025
|
|
$2.50 in
cash
|
|
$1,000
principal amount of Centene
5.25% Senior Notes due 2025 and $2.50 in cash
|
5.375% Senior Notes
due 2026 / 94946TAD8 / U9488LAB8
|
|
8/15/2026
|
|
$750,000,000
|
|
$1,000
principal amount of Centene
5.375% Senior Notes due 2026
|
|
$2.50 in
cash
|
|
$1,000
principal amount of Centene
5.375% Senior Notes due 2026 and $2.50 in cash
|
__________________
|
(1)
|
For each $1,000
principal amount of WellCare Notes (as defined herein) accepted for
exchange.
|
(2)
|
Includes the Early
Participation Payment (as defined herein).
|
In conjunction with the offers to exchange (each an "Exchange
Offer" and collectively, the "Exchange Offers") the WellCare Notes,
Centene is concurrently soliciting consents (each, a "Consent
Solicitation" and, collectively, the "Consent Solicitations") to
adopt certain proposed amendments to each of the indentures
(collectively, the "WellCare Indentures") governing the WellCare
Notes and the related WellCare Notes for that series to (i)
eliminate the obligation to file with the U.S. Securities and
Exchange Commission or provide to holders of the WellCare Notes of
such series or the trustee under such WellCare Indenture annual,
quarterly, current or any other reports with respect to WellCare,
(ii) eliminate substantially all of the restrictive covenants in
such WellCare Indenture, (iii) eliminate the obligation to offer to
repurchase the WellCare Notes of such series upon certain change of
control transactions, including the acquisition of WellCare (the
"Merger"), (iv) eliminate certain of the events which may lead to
an "Event of Default" in such WellCare Indentures, and (v)
eliminate certain restrictions on WellCare in such WellCare
Indentures from consolidating with or merging with or into any
other person or selling, assigning, transferring, conveying,
leasing, or otherwise disposing of all or substantially all of its
properties or assets to any person (collectively, the "Proposed
Amendments"). The Proposed Amendments with respect to each series
of the WellCare Notes under the WellCare Indentures require the
consent of the holders of not less than a majority in principal
amount of such series of the WellCare Notes outstanding (the
"Requisite Consents"). If the Requisite Consents are obtained for a
particular series of WellCare Notes, any remaining WellCare Notes
for that series not tendered and exchanged for Centene Notes will
be governed by the amended indenture. Each Exchange Offer and
Consent Solicitation is conditioned upon, among other things, the
completion of the other Exchange Offer and Consent Solicitation,
although Centene may waive such condition at any time with respect
to an Exchange Offer, subject to applicable law. Any waiver of a
condition by Centene with respect to an Exchange Offer will
automatically waive such condition with respect to the
corresponding Consent Solicitation, as applicable.
The Exchange Offers and Consent Solicitations are being made
pursuant to the terms and subject to the conditions set forth in
the offering memorandum and consent solicitation statement dated
November 1, 2019 and the related
letter of transmittal and consent, and are conditioned upon the
substantially concurrent closing of the Merger, which condition may
not be waived by Centene, and certain other conditions that may be
waived by Centene, subject to applicable law. Each Exchange Offer
will expire at 5:00 p.m.,
New York City time, on
December 2, 2019 (as the same may be
extended, the "Expiration Date"), unless extended or terminated.
Consents may not be revoked after the earlier of (i) 5:00 p.m., New York
City time, on November 15,
2019, unless extended or terminated (the "Early
Participation Date") and (ii) the date the applicable supplemental
indenture to the corresponding WellCare Indenture implementing the
applicable Proposed Amendments is executed. The settlement date for
the Exchange Offers is expected to occur promptly after the
Expiration Date and the Expiration Date of each of the Exchange
Offers is expected to be extended such that settlement occurs
immediately prior to, and substantially concurrent with the closing
of the Merger, which is expected to occur by the first half of
2020. As a result, the Expiration Date is expected to be extended
one or more times.
For each $1,000 principal amount
of WellCare Notes validly tendered and not validly withdrawn at or
prior to the Early Participation Date, Eligible Holders of WellCare
Notes will be eligible to receive an early participation payment of
$2.50 in cash (the "Early
Participation Payment"). In addition, for each $1,000 principal amount of WellCare Notes validly
tendered and not validly withdrawn prior to the Expiration Date,
holders of WellCare Notes will be eligible to receive the Exchange
Consideration of $1,000 principal
amount of the Centene Notes of the applicable series. The total
consideration consists of (a) $1,000
principal amount of Centene Notes of the applicable series issued
as Exchange Consideration plus (b) the Early Participation Payment
in cash (the "Total Consideration"). After the Early Participation
Date, tendered WellCare Notes may be withdrawn; however, to be
eligible to receive the Exchange Consideration, such withdrawn
WellCare Notes must be validly re-tendered and not validly
withdrawn at or prior to the Expiration Date, and any holder who
re-tenders any such WellCare Notes after the Early Participation
Date will not be eligible to receive the Early Participation
Payment.
Each Centene Note issued in the Exchange Offers for a validly
tendered WellCare Note will have an interest rate and maturity date
that is identical to the interest rate and maturity date of the
tendered WellCare Note, as well as identical interest payment dates
and optional redemption terms. No accrued and unpaid interest is
payable upon acceptance of any WellCare Notes in the Exchange
Offers and Consent Solicitations. However, the first interest
payment on the Centene Notes will include the accrued and unpaid
interest from the applicable WellCare Notes tendered in exchange
therefor so that a tendering eligible holder will receive the same
interest payment it would have received had its WellCare Notes not
been tendered in the Exchange Offers and Consent Solicitations. The
Centene Notes will be senior unsecured obligations of Centene and
will be (i) equal in right of payment with each other and with all
of Centene's existing and future senior indebtedness and (ii)
senior in right of payment to all of Centene's existing and future
unsubordinated debt.
Documents relating to the Exchange Offers and Consent
Solicitations will only be distributed to eligible holders of
WellCare Notes who complete and return an eligibility form
confirming that they are either a "qualified institutional buyer"
under Rule 144A or not a "U.S. person" and outside the United States under Regulation S for
purposes of applicable securities laws.
The complete terms and conditions of the Exchange Offers and
Consent Solicitations are described in the offering memorandum and
consent solicitation statement and related letter of transmittal
and consent, copies of which may be obtained by contacting Global
Bondholder Services Corporation, the exchange agent and information
agent in connection with the Exchange Offers and Consent
Solicitations, at (866) 470-4200 (U.S. toll-free) or (212) 430-3774
(banks and brokers). Each of the eligibility forms is available
electronically at: https://gbsc-usa.com/eligibility/centene.
Holders of WellCare Notes that are not eligible holders will not be
able to receive such documents, but Centene will make alternative
arrangements available, subject to applicable law. Such holders
should contact Global Bondholder Services Corporation to receive
information about arrangements available to them.
This press release does not constitute an offer to sell or
purchase, or a solicitation of an offer to sell or purchase, or the
solicitation of tenders or consents with respect to, any security.
No offer, solicitation, purchase or sale will be made in any
jurisdiction in which such an offer, solicitation or sale would be
unlawful. The Exchange Offers and Consent Solicitations are being
made solely pursuant to the offering memorandum and consent
solicitation statement and letter of transmittal and consent, and
only to such persons and in such jurisdictions as are permitted
under applicable law.
The Centene Notes offered in the Exchange Offers have not been
registered under the Securities Act of 1933, as amended, or any
state securities laws. Therefore, the Centene Notes may not be
offered or sold in the United
States absent registration or an applicable exemption from
the registration requirements of the Securities Act of 1933, as
amended, and any applicable state securities laws.
About Centene
Centene Corporation, a Fortune 100 company, is a diversified,
multi-national healthcare enterprise that provides a portfolio of
services to government sponsored and commercial healthcare
programs, focusing on under-insured and uninsured individuals. Many
receive benefits provided under Medicaid, including the State
Children's Health Insurance Program (CHIP), as well as Aged, Blind
or Disabled (ABD), Foster Care and Long-Term Services and
Supports (LTSS), in addition to other state-sponsored
programs, Medicare (including
the Medicare prescription drug benefit commonly known as
"Part D"), dual eligible programs and programs with the U.S.
Department of Defense. Centene also provides healthcare
services to groups and individuals delivered through commercial
health plans. Centene operates local health plans and
offers a range of health insurance solutions. It also contracts
with other healthcare and commercial organizations to provide
specialty services including behavioral health management, care
management software, correctional healthcare services, dental
benefits management, commercial programs, home-based primary care
services, life and health management, vision benefits management,
pharmacy benefits management, specialty pharmacy and telehealth
services.
Centene uses its investor relations website to publish
important information about the company, including information that
may be deemed material to investors. Financial and other
information about Centene is routinely posted and is
accessible on Centene's investor relations
website, http://www.centene.com/investors.
Cautionary Statement on Forward-Looking Statements
of Centene
All statements, other than statements of current or historical
fact, contained in this communication are forward-looking
statements. Without limiting the foregoing, forward-looking
statements often use words such as "believe," "anticipate," "plan,"
"expect," "estimate," "intend," "seek," "target," "goal," "may,"
"will," "would," "could," "should," "can," "continue" and other
similar words or expressions (and the negative thereof). In
particular, these statements include, without limitation,
statements about Centene's future operating or financial
performance, market opportunity, growth strategy, competition,
expected activities in completed and future acquisitions, including
statements about the impact of the Merger, Centene's recent
acquisition (the "Fidelis Care Transaction") of substantially all
the assets of New York State
Catholic Health Plan, Inc., d/b/a Fidelis Care New York
("Fidelis Care"), investments and
the adequacy of Centene's available cash resources.
These forward-looking statements reflect Centene's current views
with respect to future events and are based on numerous assumptions
and assessments made by Centene in light of Centene's experience
and perception of historical trends, current conditions, business
strategies, operating environments, future developments and other
factors Centene believes appropriate. By their nature,
forward-looking statements involve known and unknown risks and
uncertainties and are subject to change because they relate to
events and depend on circumstances that will occur in the future,
including economic, regulatory, competitive and other factors that
may cause Centene's or its industry's actual results, levels of
activity, performance or achievements to be materially different
from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking
statements. These statements are not guarantees of future
performance and are subject to risks, uncertainties and
assumptions.
All forward-looking statements included in this communication
are based on information available to Centene on the date of this
communication. Except as may be otherwise required by law, Centene
undertakes no obligation and expressly disclaims any obligation to
update or revise the forward-looking statements included in this
communication, whether as a result of new information, future
events or otherwise, after the date of this communication. You
should not place undue reliance on any forward-looking statements,
as actual results may differ materially from projections,
estimates, or other forward-looking statements due to a variety of
important factors, variables and events including, but not limited
to, the following: (i) the risk that regulatory or other approvals
required for the Merger may be delayed or not obtained or are
obtained subject to conditions that are not anticipated that could
require the exertion of management's time and Centene's resources
or otherwise have an adverse effect on Centene; (ii) the
possibility that certain conditions to the consummation of the
Merger will not be satisfied or completed on a timely basis and
accordingly the Merger may not be consummated on a timely basis or
at all; (iii) uncertainty as to the expected financial performance
of the combined company following completion of the Merger; (iv)
the possibility that the expected synergies and value creation from
the Merger will not be realized, or will not be realized within the
expected time period; (v) the exertion of management's time and
Centene's resources, and other expenses incurred and business
changes required, in connection with complying with the
undertakings in connection with any regulatory, governmental or
third party consents or approvals for the Merger; (vi) the risk
that unexpected costs will be incurred in connection with the
completion and/or integration of the Merger or that the integration
of WellCare will be more difficult or time consuming than expected;
(vii) the risk that potential litigation in connection with the
Merger may affect the timing or occurrence of the Merger, cause it
not to close at all, or result in significant costs of defense,
indemnification and liability; (viii) a downgrade of the credit
rating of Centene's indebtedness, which could give rise to an
obligation to redeem existing indebtedness; (ix) unexpected costs,
charges or expenses resulting from the Merger; (x) the inability to
retain key personnel; (xi) disruption from the announcement,
pendency and/or completion of the Merger, including potential
adverse reactions or changes to business relationships with
customers, employees, suppliers or regulators, making it more
difficult to maintain business and operational relationships; (xii)
the risk that, following the Merger, the combined company may not
be able to effectively manage its expanded operations, (xiii)
Centene's ability to accurately predict and effectively manage
health benefits and other operating expenses and reserves; (xiv)
competition; (xv) membership and revenue declines or unexpected
trends; (xvi) changes in healthcare practices, new technologies and
advances in medicine; (xvii) increased healthcare costs, (xviii)
changes in economic, political or market conditions; (xix) changes
in federal or state laws or regulations, including changes with
respect to income tax reform or government healthcare programs as
well as changes with respect to the Patient Protection and
Affordable Care Act and the Health Care and Education Affordability
Reconciliation Act, collectively referred to as the Affordable Care
Act ("ACA"), and any regulations enacted thereunder that may result
from changing political conditions or judicial actions, including
the ultimate outcome of the District Court decision in "Texas v.
United States of America"
regarding the constitutionality of the ACA; (xx) rate cuts or other
payment reductions or delays by governmental payors and other risks
and uncertainties affecting Centene's government businesses; (xxi)
Centene's ability to adequately price products on federally
facilitated and state-based Health Insurance Marketplaces; (xxii)
tax matters; (xxiii) disasters or major epidemics; (xxiv) the
outcome of legal and regulatory proceedings; (xxv) changes in
expected contract start dates; (xxvi) provider, state, federal and
other contract changes and timing of regulatory approval of
contracts; (xxvii) the expiration, suspension, or termination of
Centene's contracts with federal or state governments (including,
but not limited to, Medicaid, Medicare, TRICARE or other
customers); (xxviii) the difficulty of predicting the timing or
outcome of pending or future litigation or government
investigations; (xxix) challenges to Centene's contract awards;
(xxx) cyber-attacks or other privacy or data security incidents;
(xxxi) the possibility that the expected synergies and value
creation from acquired businesses, including, without limitation,
the Fidelis Care Transaction, will not be realized, or will not be
realized within the expected time period; (xxxii) the exertion of
Centene management's time and Centene's resources, and other
expenses incurred and business changes required in connection with
complying with the undertakings in connection with any regulatory,
governmental or third party consents or approvals for acquisitions;
(xxxiii) disruption caused by significant completed and pending
acquisitions, including, among others, the Fidelis Care
Transaction, making it more difficult to maintain business and
operational relationships; (xxxiv) the risk that unexpected costs
will be incurred in connection with the completion and/or
integration of acquisition transactions; (xxxv) changes in expected
closing dates, estimated purchase price and accretion for
acquisitions; (xxxvi) the risk that acquired businesses, including
Fidelis Care, will not be integrated
successfully; (xxxvii) the risk that Centene may not be able to
effectively manage its operations as they have expanded as a result
of the Fidelis Care Transaction; (xxxviii) restrictions and
limitations in connection with Centene's indebtedness; (xxxix)
Centene's ability to maintain or achieve improvement in the Centers
for Medicare and Medicaid Services star ratings and maintain or
achieve improvement in other quality scores in each case that can
impact revenue and future growth; (xl) availability of debt and
equity financing on terms that are favorable to Centene; (xli)
inflation; and (xlii) foreign currency fluctuations.
This list of important factors is not intended to be exhaustive.
Centene discusses certain of these matters more fully, as well as
certain other factors that may affect Centene's business
operations, financial condition and results of operations, in
Centene's filings with the Securities and Exchange Commission (the
"SEC"), including the registration statement on Form S-4 filed by
Centene with the SEC on May 23, 2019,
and Centene's Annual Report on Form 10-K, quarterly reports on Form
10-Q and current reports on Form 8-K. Due to these important
factors and risks, Centene cannot give assurances with respect to
Centene's future performance, including without limitation
Centene's ability to maintain adequate premium levels or Centene's
ability to control its future medical and selling, general and
administrative costs.
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SOURCE Centene Corporation