Centene pushes out exchange offers for WellCare notes until Jan. 8

By Marisa Wong

Los Angeles, Dec. 19 – Centene Corp. extended its offers to exchange two series of notes issued by WellCare Health Plans, Inc. for up to $1.95 billion of new notes to be issued by Centene and cash, as well as its concurrent consent solicitations, according to a news release.

Each exchange offer and consent solicitation will now expire at 5 p.m. ET on Jan. 8, extended from 5 p.m. ET on Dec. 18 and, before that, from 5 p.m. ET on Dec. 2.

The offers and solicitations were announced on Nov. 1 in connection with Centene’s acquisition of WellCare.

Centene is offering to exchange any and all of WellCare’s $1.2 billion outstanding 5¼% senior notes due 2025 and any and all of WellCare’s $750 million outstanding 5 3/8% senior notes due 2026.

As of 5 p.m. ET on Dec. 18, $1,142,545,000, or 95.21%, of the 2025 notes and $745,974,000, or 99.46%, of the 2026 notes had been tendered.

The exchange consideration is $1,000 principal amount of new Centene notes for each $1,000 principal amount of existing WellCare notes. The new notes will have the same coupon and maturity as the applicable series of tendered notes.

In addition, the company offered an early participation payment of $2.50 in cash for each $1,000 of notes tendered by 5 p.m. ET on Nov. 15, the early participation date.

Centene is concurrently soliciting consents to adopt some proposed amendments to each of the indentures governing the WellCare notes. The proposed amendments would eliminate the obligation to file with the Securities and Exchange Commission or provide to noteholders annual, quarterly, current or any other reports with respect to WellCare; eliminate substantially all of the restrictive covenants in the indenture; eliminate the obligation to offer to repurchase the WellCare notes upon change-of-control transactions, including the acquisition of WellCare by Centene; eliminate some events of default; and eliminate some other restrictions on WellCare.

For approval, the amendments require consents from holders of a majority in principal amount of the applicable series, which consents were received on Nov. 14.

Supplemental indentures were executed, eliminating substantially all restrictive covenants and certain events of default and other provisions in each of the indentures governing the WellCare notes. The supplemental indentures will only become operative upon the settlement date of the exchange offers.

Each exchange offer and consent solicitation is conditioned on, among other things, the completion of the other exchange offer and consent solicitation, but Centene may waive this condition at any time.

Settlement of the exchange offers is expected to occur promptly after the expiration date but is also expected to occur when the merger closes, which is slated for the first half of 2020. As a result, the expiration date is expected to be extended one or more times.

Global Bondholder Services Corp. (866 470-4200 or 212 430-3774 for banks and brokers) is the exchange agent and information agent.

Centene is a St. Louis-based health care company that provides services to government-sponsored and commercial health care programs. WellCare is a Tampa, Fla.-based provider of government-sponsored managed care services to families, children, seniors and individuals with complex medical needs.

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