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Item 1.01.
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Entry into a Material Definitive Agreement.
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On August 8, 2019, Humana Inc. (the “Company”) entered into an underwriting agreement (the “Underwriting Agreement”) with BofA Securities, Inc., Barclays Capital Inc. and Wells Fargo Securities, LLC, as representatives of the several underwriters (together, the “Underwriters”), pursuant to which the Company agreed to issue and sell to the Underwriters $500 million aggregate principal amount of its 3.125% Senior Notes due 2029 (the “2029 Senior Notes”) and $500 million aggregate principal amount of its 3.950% Senior Notes due 2049 (the “2049 Senior Notes” and, together with the 2029 Senior Notes, the “Senior Notes”), in accordance with the terms and conditions set forth in the Underwriting Agreement. The 2029 Senior Notes were sold at a public offering price of 99.898% of the aggregate principal amount thereof and the 2049 Senior Notes were sold at a public offering price of 99.634% of the aggregate principal amount thereof.
The sale of the Senior Notes has been registered with the Securities and Exchange Commission (the “Commission”) in a registration statement on Form
S-3,
File No.
333-223554
(the “Registration Statement”). The terms of the Senior Notes are described in the Company’s Prospectus dated March 9, 2018, as supplemented by a final Prospectus Supplement dated August 8, 2019 as filed with the Commission on August 9, 2019, pursuant to Rule 424(b)(5) under the Securities Act of 1933, as amended (the “Securities Act”).
The Senior Notes are unsecured senior obligations of the Company and rank equally with all of the Company’s other unsecured, unsubordinated indebtedness. The 2029 Senior Notes bear interest at an annual rate of 3.125% and the 2049 Senior Notes bear interest at an annual rate of 3.950%. Interest on the Senior Notes is payable by the Company on February 15 and August 15 of each year, beginning on February, 15 2020. The 2029 Senior Notes mature on August 15, 2029 and the 2049 Senior Notes mature on August 15, 2049. The closing of the sale of the Senior Notes is expected to occur on August 15, 2019, subject to customary closing conditions. The Company estimates that the net proceeds from the sale of the Senior Notes, after deducting the Underwriters’ discounts and commissions and estimated offering expenses, will be approximately $990 million.
The Underwriters and their affiliates have performed commercial banking, investment banking and advisory services for the Company from time to time for which they have received customary fees and expenses. The Underwriters and their affiliates may, from time to time, engage in transactions with and perform services for the Company in the ordinary course of their business. In addition, affiliates of certain of the Underwriters are lenders under the Company’s credit facility. The Company intends to use the net proceeds from this offering, together with available cash, to repay $400.0 million aggregate principal amount of the Company’s 2.625% senior notes due October 1, 2019 on the maturity date and repay outstanding amounts due under the Company’s term note. As of June 30, 2019, the outstanding balance under the Company’s term note was $650 million and the interest rate in effect on that outstanding balance was 3.55%.
A copy of the Underwriting Agreement is filed as Exhibit 1.1 to this Current Report on Form
8-K
and is incorporated by reference herein. The description of the material terms of the Underwriting Agreement is qualified in its entirety by reference to such exhibit.