UnitedHealth Lines Up Financing

The new $7.5 billion credit facility “is intended to insure the company’s immediate and continued access to additional liquidity, if necessary, and to enhance the company’s position in any litigation that is commenced with respect to the company’s outstanding debt securities,” UnitedHealth says in an announcement of the facility agreement filed with the U.S. Securities and Exchange Commission.

UnitedHealth could use the facility to supply working capital or to repay loans, the company says.

“The company believes it is not in default under the indenture governing its outstanding debt securities and intends to defend itself vigorously,” UnitedHealth says.

A revolving credit facility is the equivalent of a big corporate credit card account.

UnitedHealth has not used any of its facility borrowing capacity, but, if it starts carrying a balance, the interest rate will be a variable rate linked to changes in the London Interbank Offered Rate, a key international interest rate benchmark, UnitedHealth says.

The credit facility agreement also provides a mechanism for tying the rate to the prime rate or the federal funds rate if using LIBOR as a benchmark proves to be impractical.