The information in this preliminary prospectus supplement is not complete and may be changed. This preliminary prospectus supplement and the accompanying prospectus are not an offer to sell, and we are not soliciting an offer to buy, these securities in any state or jurisdiction where the offer or sale is not permitted.

 

Filed Pursuant to Rule 424(b)5

Registration No. 333-249491

Subject to completion, dated November 23, 2021

PRELIMINARY PROSPECTUS SUPPLEMENT

(To prospectus dated October 15, 2020)

 

CDW LLC and CDW Finance Corporation

$                % Senior Notes due 20

$                % Senior Notes due 20

$                % Senior Notes due 20

We are offering $                aggregate principal amount of                % Notes due 20    (the “20    Notes”), $                aggregate principal amount of                % Notes due 20    (the “20    Notes”) and $                aggregate principal amount of                % Notes due 20    (the “20    Notes” and, together with the 20    Notes and the 20    Notes, the “notes”), which will bear interest at the applicable rate per year for each series as set forth above. The 20    Notes will mature on                , 20    , the 20    Notes will mature on                , 20    and the 20    Notes will mature on                , 20    . Interest on the notes will accrue from                , 2021, and the first interest payment date will be                , 2022.

The notes will be redeemable at our option, in whole at any time, or in part from time to time, prior to their maturity at the respective redemption prices set forth herein. See “Description of Notes—Optional Redemption.” We do not intend to list the notes on any securities exchange. Currently, there are no public markets for the notes.

We expect to use the net proceeds from the offering of the notes to partially fund the cash consideration payable by us for the acquisition all of the issued and outstanding equity interests in Granite Parent, Inc., the indirect parent of Sirius Computer Solutions, Inc., and to pay related fees, costs and expenses. If (x) the consummation of the Acquisition (as defined herein) does not occur on or before                (the “Special Mandatory Redemption Date”); (y) we notify the Trustee (as defined herein) that we will not pursue the consummation of the Acquisition; or (z) the Purchase Agreement (as defined herein) has been terminated without the consummation of the Acquisition, we will be required to redeem the notes then outstanding (such redemption, the “Special Mandatory Redemption”) at a redemption price equal to 101% of the principal amount of the notes to be redeemed plus accrued and unpaid interest, if any, to, but excluding, the Special Mandatory Redemption Date.

The notes will be unsecured senior obligations of CDW LLC and CDW Finance Corporation (“CDW Finance”), will rank equal in right of payment with all of their existing and future senior indebtedness, but will be effectively subordinated to their existing and future secured indebtedness to the extent of the value of the collateral securing such indebtedness, and will be senior in right of payment to any of their future subordinated indebtedness. The notes will be guaranteed on an unsecured senior basis by CDW Corporation, the direct parent of CDW LLC and CDW Finance, and all of the direct and indirect domestic subsidiaries of CDW LLC that are guarantors under our senior credit facilities. The notes will be structurally subordinated to all of the liabilities and preferred stock of each of the subsidiaries of CDW LLC that do not guarantee the notes.

Investing in the notes involves risks. You should refer to “Risk factors” beginning on page S-10 of this prospectus supplement and the periodic reports and other information that we file with the Securities and Exchange Commission (the “SEC”) incorporated by reference in this prospectus supplement and carefully consider that information before deciding to purchase any notes.

 

Per 20    Note

Per 20    Note

Per 20    Note

Total

Public offering price (i)

%

%

%

$

Underwriting discounts paid by us

%

%

%

$

Net proceeds, before expenses, to us (i)

%

%

%

$

 

(i)	Plus accrued interest, if any, from                , 2021.

Neither the SEC nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus supplement or the accompanying prospectus. Any representation to the contrary is a criminal offense.

We expect that delivery of the notes will be made to investors in book-entry form through The Depository Trust Company on or about                , 2021.

Joint Bookrunning Managers

 

J.P. Morgan		BofA Securities		Wells Fargo Securities		Morgan Stanley

Capital One Securities		Mizuho Securities		MUFG

Co-managers

 

Goldman Sachs & Co. LLC		Scotiabank		US Bancorp		Siebert Williams Shank

                , 2021

TABLE OF CONTENTS

PROSPECTUS SUPPLEMENT

 

About This Document			ii
Trademarks and Service Marks			ii
Prospectus Supplement Summary			S-1
Risk Factors			S-10
Use of Proceeds			S-18
Capitalization			S-19
Unaudited Pro Forma Condensed Combined Financial Information			S-20
Description of Notes			S-31
Certain U.S. Federal Income Tax Considerations			S-62
Underwriting			S-67
Legal Matters			S-74
Experts			S-74
Where You Can Find More Information			S-74
Incorporation of Certain Information By Reference			S-75
Index to Consolidated Financial Statements of Sirius			F-1

PROSPECTUS

 

About this Prospectus			i
Where You Can Find More Information			ii
Incorporation of Certain Information by Reference			ii
Forward-Looking Statements			iii
Our Company			1
Risk Factors			1
Use of Proceeds			1
Description of Capital Stock			2
Description of Depositary Shares			6
Description of Warrants			9
Description of Subscription Rights			11
Description of Debt Securities and Guarantees			13
Description of Share Purchase Contracts and Share Purchase Units			21
Selling Stockholders			22
Plan of Distribution			22
Legal Matters			23
Experts			24

We are responsible for the information contained in or incorporated by reference into this prospectus supplement and the accompanying prospectus and any free-writing prospectus we prepare or authorize. We have not authorized anyone to provide you with different information. You should not assume that the information contained or incorporated by reference in this prospectus supplement, the accompanying prospectus or any free writing prospectus is accurate as of any date other than the date set forth on the front of the document. We and the underwriters are not making an offer of these securities in any state where the offer is not permitted.

 

i

ABOUT THIS DOCUMENT

This document consists of two parts. The first part is this prospectus supplement, which describes the specific terms of this offering and other matters relating to us and our financial condition. The second part is the accompanying prospectus, which gives more general information about securities we may offer from time to time, some of which will not apply to this offering. This prospectus supplement and the accompanying prospectus are part of a registration statement that we filed with the SEC using the SEC’s shelf registration rules. You should read both this prospectus supplement and the accompanying prospectus, together with additional information described in this prospectus supplement and the accompanying prospectus in the sections titled “Where You Can Find More Information” and “Incorporation of Certain Information by Reference.” To the extent there is a conflict between the information contained in the accompanying prospectus and this prospectus supplement, you should rely on the information in this prospectus supplement; provided that if any statement in one of these documents is inconsistent with a statement in another document having a later date—for example, a document incorporated by reference in the accompanying prospectus or this prospectus supplement—the statement in the document having the later date modifies or supersedes the earlier statement.

We and the underwriters have not authorized any dealer, salesman or other person to give any information or to make any representation other than those contained or incorporated by reference in this prospectus supplement, the accompanying prospectus or in any free writing prospectus prepared by or on behalf of us or to which we have referred you. This prospectus supplement, the accompanying prospectus and any such free writing prospectus do not constitute an offer to sell or the solicitation of an offer to buy any securities other than the registered securities to which they relate, nor do this prospectus supplement, the accompanying prospectus and any such free writing prospectus constitute an offer to sell or the solicitation of an offer to buy securities in any jurisdiction to any person to whom it is unlawful to make such offer or solicitation in such jurisdiction. You should not assume that the information contained in this prospectus supplement, the accompanying prospectus and any such free writing prospectus subsequent to the date set forth on the front of the document or that any information we have incorporated by reference is correct on any date subsequent to the date of the document incorporated by reference, even though this prospectus supplement, the accompanying prospectus and any such free writing prospectus is delivered or securities are sold on a later date.

We reserve the right to withdraw this offering at any time. We and the underwriters also reserve the right to reject any offer to purchase, in whole or in part, for any reason, or to sell less than the amount of notes offered hereby.

TRADEMARKS AND SERVICE MARKS

This prospectus supplement and the accompanying prospectus include our trademarks, such as “CDW,” which are protected under applicable intellectual property laws and are the property of CDW Corporation or its subsidiaries. This prospectus supplement and the accompanying prospectus also contain trademarks, service marks, trade names and copyrights of other companies, which are the property of their respective owners.

Solely for convenience, trademarks and trade names referred to in this prospectus supplement and the accompanying prospectus may appear without the ^® or TM symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the right of the applicable licensor to these trademarks and trade names.

 

ii

 

S-1

 

S-2

 

S-3

 

S-4

 

S-5

 

S-6

 

S-7

 

S-8

 

S-9

RISK FACTORS

You should carefully consider the following risk factors and the risk factors included under the heading “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, which is incorporated by reference in this prospectus supplement, and evaluate all of the information included and incorporated by reference in this prospectus supplement and the accompanying prospectus, including the filings we make with the SEC, before you decide to purchase any notes. Our business, financial condition, liquidity or results of operations could be materially adversely affected by any of these risks. If any of these risks are realized, the trading price of the notes would likely decline and we may not be able to make payments of interest and principal on the notes, and you may lose all or part of your original investment.

Risks Related to the Notes

We have a substantial amount of indebtedness, which could have important consequences to our business and prevent us from fulfilling our obligations under the notes.

We have a substantial amount of indebtedness. As of September 30, 2021, after giving effect to this offering, the Acquisition and the Refinancing, we would have had $6.6 billion of total long-term debt outstanding and $416 million of obligations outstanding under our inventory financing agreements, including obligations assumed from the Acquisition, and the ability to borrow approximately $1.2 billion under our New Revolving Credit Facility. Our substantial indebtedness could have important consequences to the holders of the notes, including the following:

 

•

making it more difficult for us to satisfy our obligations with respect to the notes and our other indebtedness;

 

•

requiring us to dedicate a substantial portion of our cash flow from operations to debt service payments on our and our subsidiaries’ debt, which reduces the funds available for working capital, capital expenditures, acquisitions and other general corporate purposes;

 

•

requiring us to comply with restrictive covenants in our New Senior Credit Facilities (or our Existing Senior Credit Facilities, if the Refinancing does not occur) and the more limited restrictive covenants in the indentures governing our 2024 Senior Notes, our 2025 Senior Notes, our 2028 Senior Notes, our 2029 Senior Notes and the indenture that will govern the notes offered hereby, which limit the manner in which we conduct our business;

 

•

making it more difficult for us to obtain vendor financing from our vendor partners, including original equipment manufacturers and software publishers;

 

•

limiting our flexibility in planning for, or reacting to, changes in the industry in which we operate;

 

•

placing us at a competitive disadvantage compared to any of our less leveraged competitors;

 

•

increasing our vulnerability to both general and industry-specific adverse economic conditions; and

 

•

limiting our ability to obtain additional debt or equity financing to fund future working capital, capital expenditures, acquisitions or other general corporate requirements and increasing our cost of borrowing.

We will be required to generate sufficient cash to service our indebtedness, including the notes, and, if not successful, we may be forced to take other actions to satisfy our obligations under our indebtedness.

Our ability to make scheduled payments on or to refinance our debt obligations depends on our financial and operating performance, which is subject to prevailing economic and competitive conditions and to certain financial, business and other factors beyond our control. Our outstanding long-term debt will impose significant cash interest payment obligations on us and, accordingly, we will have to generate significant cash flow from operating activities to fund our debt service obligations. We cannot assure you that we will maintain a level of cash flows from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness.

 

S-10

If our cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay capital expenditures, sell assets or operations, seek additional debt or equity capital, restructure or refinance our indebtedness, including the notes, or revise or delay our strategic plan. We cannot assure you that we would be able to take any of these actions, that these actions would be successful and permit us to meet our scheduled debt service obligations or satisfy our capital requirements, or that these actions would be permitted under the terms of our existing or future debt agreements, including our Senior Credit Facilities, our existing indentures and the indenture that will govern the notes offered hereby. In the absence of such operating results and resources, we could face substantial liquidity problems and might be required to dispose of material assets or operations to meet our debt service and other obligations. Our Existing Senior Credit Facilities restrict our ability to dispose of assets and use the proceeds from the disposition. We may not be able to consummate those dispositions or to obtain the proceeds which we could realize from them and these proceeds may not be adequate to meet any debt service obligations then due.

If we cannot make scheduled payments on our debt, we will be in default and, as a result:

 

•

our debt holders could declare all outstanding principal and interest to be due and payable; and

 

•

we could be forced into bankruptcy or liquidation, which could result in holders of notes losing their investment in the notes.

Despite our indebtedness levels, we and our subsidiaries may be able to incur substantially more debt, including secured debt. This could further increase the risks associated with our leverage.

We and our subsidiaries may be able to incur substantial additional indebtedness in the future. The terms of our Senior Credit Facilities and our existing indentures do not, and the indenture that will govern the notes offered hereby will not, fully prohibit us or our subsidiaries from doing so. To the extent that we incur additional indebtedness or such other obligations, the risks associated with our substantial indebtedness described above, including our possible inability to service our debt, will increase. As of September 30, 2021, after giving effect to this offering, the consummation of the Acquisition and the Refinancing, we would have had approximately $1.2 billion available for additional borrowing under our New Revolving Credit Facility.

Restrictive covenants under our Existing Senior Credit Facilities and, to a lesser degree, our New Senior Credit Facilities and our existing indentures may adversely affect our operations and liquidity.

Our Existing Senior Credit Facilities and, to a lesser degree, the New Senior Credit Facilities we expect to enter into in connection with the Refinancing and our existing indentures contain, and any future indebtedness of ours may contain, various covenants that limit our ability to, among other things:

 

•

incur or guarantee additional debt;

 

•

pay dividends or make distributions to holders of our capital stock or to make certain other restricted payments or investments;

 

•

repurchase or redeem capital stock;

 

•

make loans, capital expenditures or investments or acquisitions;

 

•

receive dividends or other payments from our subsidiaries;

 

•

enter into transactions with affiliates;

 

•

create liens;

 

•

merge or consolidate with other companies or transfer all or substantially all of our assets;

 

•

transfer or sell assets, including capital stock of subsidiaries; and

 

•

prepay, repurchase or redeem debt that is junior in right of payment to the notes.

 

S-11

Additionally, our New Senior Credit Facilities require (or, if the Refinancing has not been consummated, are expected to require) us to maintain a maximum leverage ratio of consolidated total indebtedness (as defined in the New Senior Credit Facilities) to consolidated EBITDA of, initially, 4.50x and, from and after the fiscal quarter ending on or about March 31, 2023, 4.00x (and, in the case of the first four full fiscal quarters following the consummation of a qualified acquisition (as defined in the New Senior Credit Facilities), 4.50x) as of the end of each fiscal quarter.

As a result of these covenants, we are limited in the manner in which we conduct our business and we may be unable to engage in favorable business activities or finance future operations or capital needs. A breach of any of these covenants or any of the other restrictive covenants would result in a default under our Senior Credit Facilities. Upon the occurrence of an event of default under our Senior Credit Facilities, the lenders:

 

•

will not be required to lend any additional amounts to us;

 

•

could elect to declare all borrowings outstanding thereunder, together with accrued and unpaid interest and fees, to be due and payable; or

 

•

could require us to apply all of our available cash to repay these borrowings.

The acceleration of amounts outstanding under our Senior Credit Facilities would trigger an event of default under our existing indentures.

If the lenders under our Senior Credit Facilities accelerate the repayment of borrowings, we cannot assure you that we will have sufficient assets to repay our Senior Credit Facilities and our other indebtedness, including the notes, or the ability to borrow sufficient funds to refinance such indebtedness. Even if we were able to obtain new financing, it may not be on commercially reasonable terms, or terms that are acceptable to us.

The notes will be unsecured and will be effectively subordinated to our and the guarantors’ secured debt.

The Issuers’ obligations under the notes and the guarantors’ obligations under the guarantees of the notes will not be secured by any of our or our subsidiaries’ assets. Borrowings under our Existing Senior Credit Facilities are secured by a security interest in substantially all of our assets and the assets of the guarantors. Although we expect the Refinancing will replace the majority of our secured debt with unsecured debt, there can be no assurance that the Refinancing will occur, or that we will not incur additional secured debt in the future. The indenture that will govern the notes will permit us and our subsidiaries to incur additional secured debt. As a result, the notes and the guarantees will be effectively subordinated to all of the Issuers’ and the guarantors’ secured debt and other obligations to the extent of the value of the assets securing such obligations. If the Issuers and the guarantors were to become insolvent or otherwise fail to make payments on the notes, holders of the Issuers’ and the guarantors’ secured obligations would be paid first and would receive payments from the assets securing such obligations before the holders of the notes would receive any payments. You may therefore not be fully repaid in the event we become insolvent or otherwise fail to make payments on the notes

Variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly.

Certain of our borrowings, primarily borrowings under our Senior Credit Facilities, are at variable rates of interest and expose us to interest rate risk. As of September 30, 2021, after giving effect to the Refinancing, we would have had approximately $1.6 billion of variable rate debt outstanding. If interest rates increase, our debt service obligations on the variable rate indebtedness would increase even though the amount borrowed remained the same, and our net income would decrease. Although we have entered into interest rate cap agreements on our Term Loan Facility to reduce interest rate volatility, we cannot assure you we will be able to enter into interest rate cap agreements in the future on acceptable terms or that such caps or the caps we have in place now will be effective.

 

S-12

The notes are structurally subordinated to all indebtedness of our existing or future subsidiaries that do not become guarantors of the notes.

Holders of the notes do not have any claim as a creditor against any of our existing subsidiaries that are not guarantors of the notes or against any of our future subsidiaries that do not become guarantors of the notes. Indebtedness and other liabilities, including trade payables of those subsidiaries will be structurally senior to claims of holders of the notes against those subsidiaries. As of September 30, 2021, our non-guarantor subsidiaries had approximately $791.3 million of total liabilities, all of which would have been structurally senior to the notes.

The notes are not guaranteed by our foreign subsidiaries and will not be guaranteed by any future foreign subsidiaries. Nor are they guaranteed by certain immaterial domestic subsidiaries. Our non-guarantor subsidiaries are separate and distinct legal entities and have no obligation, contingent or otherwise, to pay any amounts due under the notes, or to make any funds available therefor, whether by dividends, loans, distributions or other payments. In the event of a bankruptcy, liquidation, reorganization or other winding up of any of these non-guarantor subsidiaries or any future subsidiary that is not a guarantor of the notes, these non-guarantor subsidiaries will pay the holders of their debts, holders of preferred equity interests and their trade creditors before they will be able to distribute any of their assets to us (except to the extent we have a claim as a creditor of such non-guarantor subsidiary). Any right that we or the subsidiary guarantors have to receive any assets of any non-guarantor subsidiaries upon the bankruptcy, liquidation, reorganization or other winding up of those subsidiaries, and the consequent rights of holders of notes to realize proceeds from the sale of any of those subsidiaries’ assets, will be effectively subordinated to the claims of those subsidiaries’ creditors, including trade creditors and holders of preferred equity interests of those subsidiaries.

As of and for the nine months ended September 30, 2021, our non-guarantor subsidiaries represented approximately 16% of our total assets, 10% of our total liabilities, including trade payables, 12% of our net sales and 7% of our net income, respectively, in each case after intercompany eliminations.

In addition, the indenture that will govern the notes offered hereby permits these subsidiaries to incur additional indebtedness and does not contain any limitation on the amount of certain other liabilities, such as trade payables, that may be incurred by these subsidiaries.

Our ability to service our debt and meet our cash requirements depends on many factors, some of which are beyond our control.

Our ability to satisfy our obligations and meet our cash requirements for the foreseeable future will depend on our future operating performance and financial results, which will be subject, in part, to factors beyond our control, including interest rates and general economic, financial and business conditions. If we are unable to generate sufficient cash flow to service our debt, we may be required to:

 

•

refinance all or a portion of our debt, including the notes;

 

•

obtain additional financing;

 

•

sell some of our assets or operations;

 

•

reduce or delay capital expenditures and/or acquisitions; or

 

•

revise or delay our strategic plan, including our recently announced capital allocation strategy.

If we are required to take any of these actions, it could have a material adverse effect on our business, financial condition and results of operations. In addition, we cannot assure you that we would be able to take any of these actions, that these actions would enable us to continue to satisfy our capital requirements or that these actions would be permitted under the terms of our various debt instruments, including our Senior Credit Facilities, our

 

S-13

existing indentures and the indenture that will govern the notes offered hereby. In addition, our Existing Senior Credit Facilities restrict our ability to sell assets and to use the proceeds from the sales. We may not be able to sell assets quickly enough or for sufficient amounts to enable us to meet our obligations, including our obligations on the notes. Therefore, it may be difficult for us to make required payments on the notes in the event of an acceleration of the maturity of the notes.

Our ability to make payments on the notes depends on our ability to receive dividends and other distributions from our subsidiaries.

Our principal assets are the equity interests that we hold in our operating subsidiaries. As a result, we are dependent on dividends and other distributions from our subsidiaries to generate the funds necessary to meet our financial obligations, including the payment of principal and interest on our outstanding debt. Our subsidiaries may not generate sufficient cash from operations to enable us to make principal and interest payments on our indebtedness, including the notes. In addition, any payment of dividends, distributions, loans or advances to us by our subsidiaries could be subject to restrictions on dividends or, in the case of foreign subsidiaries, restrictions on repatriation of earnings under applicable local law and monetary transfer restrictions in the jurisdictions in which our subsidiaries operate. In addition, payments to us by our subsidiaries will be contingent upon our subsidiaries’ earnings. Our subsidiaries are permitted under the terms of our indebtedness to incur additional indebtedness that may restrict payments from those subsidiaries to us. We cannot assure you that agreements governing current and future indebtedness of our subsidiaries will permit those subsidiaries to provide us with sufficient cash to fund payments on the notes when due.

Our subsidiaries are legally distinct from us and, except for our existing and future subsidiaries that will be guarantors of the notes, have no obligation, contingent or otherwise, to pay amounts due on our debt or to make funds available to us for such payment.

If we default on our obligations to pay our indebtedness, we may not be able to make payments on the notes.

Any default under the agreements governing our indebtedness, including a default under our Senior Credit Facilities that is not waived by the required lenders, and the remedies sought by the holders of such indebtedness, could make us unable to pay principal, premium, if any, and interest on the notes and substantially decrease the value of the notes. If we are unable to generate sufficient cash flow and are otherwise unable to obtain funds necessary to meet required payments of principal, premium, if any, and interest on our indebtedness, or if we otherwise fail to comply with the various covenants, including financial and operating covenants, in the instruments governing our indebtedness (including covenants in our Existing Senior Credit Facilities and, to a lesser degree, the New Senior Credit Facilities we expect to enter into in connection with the Refinancing and the indentures governing our 2024 Senior Notes, our 2025 Senior Notes, our 2028 Senior Notes, our 2029 Senior Notes and the indenture that will govern the notes offered hereby), we could be in default under the terms of the agreements governing such indebtedness, including our Senior Credit Facilities, our existing indentures and the indenture that will govern the notes offered hereby. In the event of such default, the holders of such indebtedness could elect to declare all the funds borrowed thereunder to be due and payable, together with accrued and unpaid interest, the lenders under our Senior Credit Facilities could elect to terminate their commitments thereunder and cease making further loans and we could be forced into bankruptcy or liquidation. If our operating performance declines, we may in the future need to obtain waivers from the required lenders under our Senior Credit Facilities to avoid being in default. If we breach our covenants under our Senior Credit Facilities and seek a waiver, we may not be able to obtain a waiver from the required lenders. If this occurs, we would be in default under our Senior Credit Facilities, the lenders could exercise their rights, as described above, and we could be forced into bankruptcy or liquidation. See “Description of Notes” in this prospectus supplement.

 

S-14

If we are required to redeem the notes in connection with a special mandatory redemption, holders of the notes may not obtain their expected return on the notes.

If (x) the consummation of the Acquisition does not occur on or before October 11, 2022; (y) we notify the Trustee that we will not pursue the consummation of the Acquisition; or (z) the Purchase Agreement has been terminated without the consummation of the Acquisition, we will be required to redeem the mandatorily redeemable notes then outstanding at a redemption price equal to 101% of the principal amount of the notes to be redeemed plus accrued and unpaid interest, if any, to, but excluding, the Special Mandatory Redemption Date. Our ability to consummate the Acquisition is subject to various closing conditions, including regulatory approvals and other matters over which we have limited or no control. If we abandon the Acquisition and are required to redeem the notes, holders of such notes may not obtain their expected return on such notes and may not be able to reinvest the proceeds from a special mandatory redemption in an investment that results in a comparable return. Holders of the notes will have no right to opt out of the special mandatory redemption provisions of such notes.

Your decision to invest in the notes is made at the time of the offering of the notes. Further, holders of the notes will have no rights under the special mandatory redemption provision if the Acquisition is consummated, nor will such holders have any right to require us to redeem such notes, if, between the closing of the notes offering and the closing of the Acquisition, we experience any changes in our business or financial condition or if the terms of the Acquisition change.

We may be unable to redeem the notes in the event of a special mandatory redemption.

We are not obligated to place the proceeds of this offering of notes in escrow prior to the closing of the Acquisition or to provide a security interest in such proceeds, and there are no other restrictions on our use of such proceeds during such time. Accordingly, we will need to fund any special mandatory redemption using proceeds that we have voluntarily retained or from other sources of liquidity. As a result, in the event of a special mandatory redemption, we may not have sufficient funds to redeem the notes.

We may be unable to purchase the notes upon a change of control repurchase event which would result in a default under the indenture that will govern the notes offered hereby and would adversely affect our business.

Under certain circumstances, we are required, under the terms of the notes, to offer to purchase all of the outstanding notes at 101% of their principal amount if we experience a change of control and a related downgrade in the credit rating of the notes. Our failure to repay holders tendering notes upon a change of control and related downgrade will result in an event of default under the notes. If a change in control and a related downgrade were to occur, we cannot assure you that we would have sufficient funds to purchase the notes, or any other securities that we would be required to offer to purchase, particularly if that change of control event triggers a similar repurchase requirement for, or results in the acceleration of, other indebtedness. We may require additional financing from third parties to fund any such purchases, but we cannot assure you that we would be able to obtain such financing.

The change of control provision may not protect you in the event we complete a highly leveraged transaction, reorganization, restructuring, merger or other similar transaction, unless such transaction constitutes a change of control repurchase event. Such a transaction may not involve a change of the magnitude required under the definition of change of control or may not result in a ratings downgrade to trigger our obligation to repurchase the notes. Except as described under “Description of Notes—Repurchase at the Option of Holders—Change of Control,” the notes do not contain provisions that permit the holders of the notes to require us to repurchase or redeem the notes in the event of a takeover, recapitalization or similar transaction.

Federal and state statutes allow courts, under specific circumstances, to void notes and adversely affect the validity and enforceability of the guarantees and require noteholders to return payments received.

The issuance of, and payments made under, the notes and the guarantees may be subject to review under federal and state fraudulent transfer and conveyance statutes. While the relevant laws may vary from state to state,

 

S-15

generally under such laws the incurrence of an obligation (such as under the notes or guarantees) or the making of a payment or other transfer will be a fraudulent conveyance if (1) we or any of our guarantors, as applicable, incurred such obligation or made such payment with the intent of hindering, delaying or defrauding creditors or (2) we or any of our guarantors, as applicable, received less than reasonably equivalent value or fair consideration in return for incurring such obligation or making such payment and, in the case of (2) only, one of the following is also true:

 

•

we or the applicable guarantor were insolvent at the time of or rendered insolvent by reason of the incurrence of the obligation or the making of such payment; or

 

•

the incurrence of the obligation or the making of such payment of the consideration left us or the applicable guarantor with an unreasonably small amount of capital to carry on our or its business; or

 

•

we or the applicable guarantor intended to, or believed that we or it would, incur debts beyond our or its ability to pay them as they mature.

If a court were to find that the issuance of the notes or guarantees, or a payment made under the notes or guarantees, was a fraudulent conveyance, the court could void the payment obligations under the notes or such guarantees or subordinate the notes or such guarantees to presently existing and future indebtedness of ours or any such guarantor, and require the holders of the notes to repay particular amounts or any amounts received with respect to the notes or such guarantees. In the event of a finding that a fraudulent conveyance occurred, you may not receive any repayment on the notes. Further, the voiding of the notes or the guarantees could result in an event of default with respect to our other debt and that of our guarantors that could result in acceleration of such debt.

The measures of insolvency for purposes of these fraudulent transfer laws will vary depending upon the law applied in any proceeding to determine whether a fraudulent transfer has occurred. In general, however, a court would consider an issuer or a guarantor insolvent if:

 

•

the sum of its debts, including contingent and unliquidated liabilities, was greater than all of its property, at a fair valuation;

 

•

the present fair saleable value of its assets was less than the amount that would be required to pay its probable liability on its existing debts, including contingent unliquidated liabilities, as they become absolute and matured; or

 

•

it could not pay its debts as they became due.

We cannot be certain as to the standards a court would use to determine whether or not we or the guarantors were solvent at the relevant time, or regardless of the standard that a court uses, that the notes and the guarantees would not be subordinated to our or any guarantor’s other debt.

If the guarantees were legally challenged, any guarantee could also be subject to the claim that, since the guarantee was incurred for our benefit, and only indirectly for the benefit of the guarantor, the obligations of the applicable guarantor were incurred for less than reasonably equivalent value or fair consideration. A court could thus void the obligations under the guarantees, subordinate them to the applicable guarantor’s other debt or take other action detrimental to the holders of the notes.

Each guarantee contains a provision intended to limit the guarantor’s liability to the maximum amount that it could incur without causing the incurrence of obligations under its guarantee to be a fraudulent transfer. This provision may not be effective to protect the guarantees from being voided under fraudulent transfer law, or may reduce or eliminate the guarantor’s obligation to an amount that effectively makes the guarantee worthless. Although subsequently overturned on other grounds, a recent Florida bankruptcy court decision found that this kind of provision was ineffective to protect the guarantees.

 

S-16

The trading prices for the notes will be directly affected by many factors, including our credit rating.

Credit rating agencies continually revise their ratings for companies they follow or discontinue rating companies, including us. Any ratings downgrade or decisions by a credit rating agency to discontinue rating us could adversely affect the trading price of the notes, or the trading market for the notes, to the extent a trading market for the notes develops. The condition of the financial and credit markets and prevailing interest rates have fluctuated in the past and are likely to fluctuate in the future and any fluctuation may impact the trading price of the notes.

We cannot assure you that an active trading market will develop for the notes.

Prior to this offering, there has been no trading market for the notes, and we do not intend to apply to list the notes on any securities exchange or to arrange for quotation on any automated dealer quotation system. We have been informed by the underwriters that they intend to make a market in the notes after this offering is completed. However, the underwriters may cease their market-making at any time without notice. In addition, the liquidity of the trading market in the notes, and the market price quoted for the notes, may be adversely affected by changes in the overall market for this type of security and by changes in our financial performance or prospects or in the prospects for companies in our industry generally. As a result, we cannot assure you that an active trading market will develop for the notes. If an active trading market does not develop or is not maintained, the market price and liquidity of the notes may be adversely affected. In that case you may not be able to sell your notes at a particular time or you may not be able to sell your notes at a favorable price.

 

S-17

USE OF PROCEEDS

We estimate that our net proceeds from the issuance and sale of the notes will be approximately $                 , after deducting underwriters’ discounts and our estimated offering expenses. We intend to use the net proceeds from this offering, together with cash on hand and borrowings under our New Revolving Credit Facility (or, if the Refinancing is not completed, borrowings under our ABL Facility), to fund the purchase price of the Acquisition, and to pay related fees and expenses. In advance of consummating the Acquisition, we intend to complete the Refinancing, although the Acquisition is not contingent upon the Refinancing and there can be no assurance that the Refinancing will occur on the terms described in this prospectus supplement, or at all.

The notes will be subject to a special mandatory redemption in the event the Acquisition is not consummated as described in “Description of Notes—Special Mandatory Redemption.”

 

S-18

CAPITALIZATION

The following table sets forth our consolidated cash and cash equivalents and capitalization as of September 30, 2021 on:

 

•

an actual basis;

 

•

a pro forma basis to give pro forma effect to this offering and the Acquisition and the other adjustments described under “Unaudited Pro Forma Condensed Combined Financial Statements” and “Use of Proceeds”; and

 

•

a pro forma as adjusted basis to give further effect to the Refinancing, which we currently expect to occur contemporaneously with the issuance of the Notes offered hereby and contemporaneously with the closing of the Acquisition. See “Summary—Recent Developments—Proposed Debt Refinancing”.

This information should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the historical consolidated financial statements and related notes in our filings incorporated by reference in this prospectus supplement and the accompanying prospectus.

 

		As of September 30, 2021
(in millions)		Actual				Pro Forma				Pro Forma Adjusted
Cash and cash equivalents		$	245.1			$	194.1			$	202.0
Debt (including current portion):
ABL Facility			165.9				165.9				—
Existing Term Loan Facility(1)			1,412.2				1,412.2				—
New Revolving Credit Facility(2)			—				—				165.9
New Term Loan Facility			—				—				1,420.0
2024 Senior Notes(3)			575.0				575.0				575.0
2025 Senior Notes(4)			600.0				600.0				600.0
2028 Senior Notes(5)			600.0				600.0				600.0
2029 Senior Notes(6)			700.0				700.0				700.0
20     Senior Notes offered hereby			—				(7	)			(7	)
20     Senior Notes offered hereby			—				(7	)			(7	)
20     Senior Notes offered hereby			—				(7	)			(7	)
Finance lease obligations			13.5				13.5				13.5
Total debt (including current portion)(7)			4,066.6				6,566.6				6,574.4
Stockholders’ equity			837.0				802.0				802.0
Total capitalization		$	4,903.6			$	7,368.6			$	7,363.4

 

(1)	Excludes unamortized discount and deferred financing costs of $2.8 million.

(2)	Assuming the completion of the Refinancing and after giving pro forma effect to this offering and the Acquisition, as of September 30, 2021, we would have had the ability to borrow approximately $1.2 billion under our New Revolving Credit Facility.

(3)	Does not account for unamortized deferred financing costs of $2.4 million.

(4)	Does not account for unamortized deferred financing costs of $5.3 million.

(5)	Does not account for unamortized deferred financing costs of $5.6 million.

(6)	Does not account for unamortized deferred financing costs of $7.6 million.

(7)

The amount (i) assumes the issuance of $2,500 million in aggregate principal amount of Notes in connection with this offering and (ii) does not include the $340.0 million balance of accounts payable–inventory financing as of September 30, 2021 related to the obligations under our inventory financing agreements (or $416 million as of September 30, 2021 on a pro forma basis). We include these obligations in current liabilities and not in total debt because we have not in the past incurred, and in the future do not expect to incur, any interest expense under these agreements. Also excludes $23.3 million of other liabilities (or $159.3 million as of September 30, 2021 on a pro forma basis) which are classified as debt under GAAP but are not treated as indebtedness under our Existing Senior Credit Facilities and which we do not expect will be treated as indebtedness under our New Senior Credit Facilities.

 

S-19

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

The following unaudited pro forma condensed combined financial statements present the combined financial information of CDW and Sirius, adjusted to give effect to the Acquisition in accordance with the terms and conditions outlined in the Purchase Agreement between CDW LLC and Sirius Computer Solutions Holdco, LP, and related financing transactions (including the issuance and sale of the notes offered hereby). The following unaudited pro forma condensed combined financial statements have been prepared in accordance with Article 11 of Regulation S-X, Pro Forma Financial Information, as amended by Release No. 33-10786 “Amendments to Financial Disclosures about Acquired and Disposed Businesses,” which is herein referred to as Article 11.

Article 11 provides simplified requirements to depict the accounting for the transaction (“Transaction Accounting Adjustments”) and the option to present the reasonably estimable synergies and other transaction effects that have occurred or are reasonably expected to occur (“Management’s Adjustments”). CDW has elected not to present Management’s Adjustments and has only presented Transaction Accounting Adjustments in the following unaudited pro forma condensed combined financial statements. The unaudited pro forma condensed combined financial statements do not give effect to the Refinancing described elsewhere in this prospectus supplement.

The unaudited pro forma condensed combined balance sheet as of September 30, 2021 combines the historical balance sheets of CDW and Sirius on a pro forma basis as if the Acquisition and related financing transactions had been consummated on September 30, 2021. The unaudited pro forma condensed combined statements of operations for the nine months ended September 30, 2021 and the year ended December 31, 2020 combine the historical statements of operations of CDW and Sirius on a pro forma basis as if the Acquisition and related financing transactions had been consummated on January 1, 2020, the beginning of the earliest period presented.

The unaudited pro forma condensed combined financial statements have been presented for illustrative purposes only and are not necessarily indicative of the operating results and financial position that would have been achieved had the Acquisition and related financing transactions occurred on the dates indicated. Further, the unaudited pro forma condensed combined financial statements do not purport to project the future operating results or financial position of the combined company following the completion of the Acquisition and related financing transactions.

The unaudited pro forma adjustments represent management’s estimates based on preliminary information and estimates available as of the date of the prospectus supplement in which these unaudited pro forma condensed combined financial statements are included and are subject to change, perhaps materially, as additional information becomes available and analyses are performed. The assumptions and estimates underlying the pro forma adjustments set forth in the unaudited pro forma condensed combined financial statements are described in the accompanying notes.

 

S-20

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

AS OF SEPTEMBER 30, 2021

(amounts in millions)

 

		CDW Historical				Sirius Historical				Acquisition Pro Forma Adjustments								Financing Pro Forma Adjustments								CDW Pro Forma Combined
Assets
Current assets:
Cash and cash equivalents		$	245			$	191			$	(37	)			1A			$	2,478				1H			$	194
											(1,009	)			1B
											(1,662	)			1C
											(12	)			1D
Accounts receivable, net of allowance			3,561				810				—								—								4,371
Merchandise inventory			844				12				—								—								856
Other current assets			642				121				12				1D				—								775
Total current assets			5,292				1,134				(2,708	)							2,478								6,196
Goodwill			2,805				711				880				1C				—								4,396
Other intangible assets, net			503				855				276				1C				—								1,634
Other assets			412				225				40				1E				—								662
											2				1F
											(17	)			1C
Total Assets		$	9,012			$	2,925			$	(1,527	)						$	2,478							$	12,888
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable-trade			2,281				772			$	(76	)			1G				—								2,977
Accounts payable-inventory financing			340				—				76				1G				—								416
Current maturities of long-term debt			29				60				(7	)			1B				—								82
Contract liabilities			304				43				(10	)			1C				—								337
Accrued expenses and other current liabilities			879				112				(3	)			1A				—								991
											3				1F
Total current liabilities			3,833				987				(17	)							—								4,803
Debt			4,038				1,085				(1,002	)			1B				2,478				1H				6,599
Other liabilities			304				284				56				1C				—								684
											40				1E
Total Liabilities		$	8,175			$	2,356			$	(923	)						$	2,478							$	12,086
Stockholders’ equity:
Common stock			1				—				—								—								1
Paid-in capital			3,336				491				(491	)			1C				—								3,336
(Accumulated deficit)/Retained Earnings			(2,403	)			78				(34	)			1A				—								(2,438	)
											(78	)			1C
											(1	)			1F
Accumulated other comprehensive loss			(97	)			—				—								—								(97	)
Total stockholders’ equity			837				569				(604	)							—								802
Total Liabilities and Stockholders’ Equity		$	9,012			$	2,925			$	(1,527	)						$	2,478							$	12,888

 

S-21

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021

(amounts in millions, except per share data)

 

		CDW Historical				Sirius Historical				Acquisition Pro Forma Adjustments								Financing Pro Forma Adjustments								CDW Pro Forma Combined
Net sales		$	15,284			$	650			$	933				2A			$	—							$	16,867
Cost of sales			12,691				173				937				2A				—								13,835
											36				2C
											(2	)			2D
Gross profit			2,593				477				(38	)							—								3,032
Selling and administrative expenses			1,513				379				(36	)			2C				—								1,912
											(38	)			2D
											87				2E
											6				2F
											1				2H
Operating income			1,080				98				(58	)							—								1,120
Interest expense, net			(108	)			(49	)			49				2D				(56	)			2K				(164	)
Other income (expense), net			38				(1	)			—								—								37
Income before income taxes			1,010				48				(9	)							(56	)							993
Income tax expense			(237	)			(13	)			2				2J				14				2K				(234	)
Net income		$	773			$	35			$	(7	)						$	(42	)						$	759
Net income per common share:
Basic		$	5.54																							$	5.44
Diluted		$	5.47																							$	5.37
Weighted-average common shares outstanding:
Basic			139.5																								139.5
Diluted			141.4																								141.5

 

S-22

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2020

(amounts in millions, except per share data)

 

		CDW Historical				Sirius Historical				Acquisition Pro Forma Adjustments								Financing Pro Forma Adjustments								CDW Pro Forma Combined
Net sales		$	18,468			$	867			$	1,324				2A			$	—							$	20,649
											(10	)			2B				—								—
Cost of sales			15,258				234				1,329				2A				—								16,869
											51				2C
											(3	)			2D
Gross profit			3,210				633				(63	)							—								3,780
Selling and administrative expenses			2,031				502				(51	)			2C				—								2,649
											(47	)			2D
											116				2E
											31				2F
											37				2G
											2				2H
											28				2I
Operating income			1,179				131				(179	)							—								1,131
Interest expense, net			(155	)			(70	)			70				2D				(75	)			2K				(230	)
Other expense, net			(21	)			(3	)			(54	)			2I				—								(78	)
Income before income taxes			1,003				58				(163	)							(75	)							823
Income tax expense			(214	)			(18	)			39				2J				20				2K				(173	)
Net income		$	789			$	40			$	(124	)						$	(55	)						$	650
Net income per common share:
Basic		$	5.53																							$	4.56
Diluted		$	5.45																							$	4.49
Weighted-average common shares outstanding:
Basic			142.6																								142.6
Diluted			144.8																								144.8

 

S-23

NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

(in millions, except per share data or otherwise noted)

Note 1. Description of the Transactions

Sirius Acquisition Overview

On October 15, 2021, CDW LLC entered into a definitive Purchase Agreement to acquire Sirius, for $2.5 billion in cash (subject to certain adjustments), the consummation of which is subject to customary closing conditions. Sirius is a leading provider of secure, mission-critical technology-based solutions and is one of the largest IT solutions integrators in the United States, leveraging its services-led approach, broad portfolio of hybrid infrastructure solutions, and deep technical expertise of its 2,600 coworkers to support corporate and public customers. The consideration for the Acquisition is expected to be primarily funded with the net proceeds of the notes offered hereby, as described below.

Transaction Financing

In connection with entry into the Purchase Agreement, on October 15, 2021, CDW LLC entered into a commitment letter for a 364-day senior unsecured bridge loan facility in an aggregate principal amount up to $2.5 billion (the “Bridge Facility”). Given that CDW LLC intends to obtain permanent financing for the Acquisition through this offering of notes, the Bridge Facility is not expected to be used. The net proceeds of the notes offered hereby, together with cash on hand and, if necessary, borrowings under the ABL Facility or New Revolving Facility, will be used to fund the purchase price of the Acquisition, and to pay related fees and expenses. Certain fees will be incurred under the Bridge Facility regardless of whether the funds are drawn thereunder, and these fees, to the extent not included in the historical financial statements of the Company, are included in the pro forma transaction expense adjustment.

Note 2. Basis of Pro Forma Presentation

The unaudited pro forma condensed combined financial statements are derived from the historical consolidated financial statements of CDW and the historical consolidated financial statements of Sirius. The unaudited pro forma condensed combined statements of operations for the year ended December 31, 2020 and the nine-month period ended September 30, 2021 have been prepared as if the Acquisition and related financing transactions had been consummated on January 1, 2020, and the unaudited pro forma condensed combined balance sheet was prepared as if the Acquisition and related financing transactions had been consummated on September 30, 2021.

The unaudited pro forma condensed combined financial statements are prepared as a business combination using the acquisition method of accounting in accordance with Financial Accounting Standards Board Accounting Standards Codification (“ASC”) Topic 805, Business Combinations, using the fair value concepts defined in ASC Topic 820, Fair Value Measurements and Disclosures. CDW has been treated as the acquirer for financial reporting purposes. Under the acquisition method of accounting, the purchase consideration allocated to Sirius’ assets and liabilities for preparation of these pro forma financial statements is based upon their estimated preliminary fair values assuming the Acquisition was completed as of September 30, 2021. The amount of the estimated purchase consideration that was in excess of the estimated preliminary fair values of Sirius’ net assets and liabilities on September 30, 2021 is recorded as goodwill in the pro forma condensed combined balance sheet.

Given that the Acquisition has not been completed as of the date of the prospectus supplement in which these unaudited pro forma condensed combined financial statements are included, CDW has not performed the detailed valuation studies necessary to arrive at the final estimates of the fair value of Sirius’ assets to be acquired, the liabilities to be assumed and the related allocations of purchase price. Actual results may differ from these unaudited pro forma condensed combined financial statements once the Acquisition is completed and CDW has

 

S-24

determined the final purchase price for Sirius and has completed the valuation studies necessary to finalize the required purchase price allocations, including identifying any additional conforming accounting policy changes for Sirius. The final purchase accounting adjustments may be materially different from the unaudited pro forma adjustments.

These unaudited pro forma condensed combined financial statements are presented for illustrative purposes only and do not give effect to any cost savings from operating efficiencies, revenue synergies, differences in stand-alone costs or carve out allocations for Sirius or costs for the integration of Sirius’ operations. These unaudited pro forma condensed combined financial statements also do not purport to represent what the actual consolidated results of operations of CDW would have been had the Acquisition been completed on the dates assumed, nor are they indicative of future consolidated results of operations or the consolidated financial position of the combined company. Any transaction, separation or integration costs will be expensed in the appropriate accounting periods after completion of the Acquisition.

Note 3. Accounting Policies

The accounting policies used in the preparation of these unaudited pro forma condensed combined financial statements are those set out in CDW’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020. CDW conducted an initial review of Sirius’ accounting policies to determine if differences in accounting policies and account classifications require reclassification of results of operations or reclassification of assets or liabilities to conform to CDW’s accounting policies and classifications. During the preparation of these unaudited pro forma condensed combined financial statements, CDW identified the following differences in accounting policies:

 

•

Accounting Standard Update (“ASU”) 2016-02, Leases (Topic 842) (“Topic 842”) has not yet been adopted by Sirius. An estimated pro forma adjustment has been included to conform with CDW’s accounting policy for leases. For additional information, refer to Note 5 (Transaction Accounting Adjustments to Unaudited Pro Forma Condensed Combined Financial Information).

 

•

ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments has not yet been adopted by Sirius. The impact to conform with CDW’s accounting policy for estimating credit losses is not expected to have a significant impact, and therefore no pro forma adjustment has been included.

CDW also identified certain reclassifications and adjustments necessary to conform Sirius’ classification to CDW’s financial statement presentation. The following is a summary of these reclassifications and adjustments:

 

•

Based on Sirius’ revenue recognition policies identified during CDW’s preliminary review, all drop-ship hardware and software licenses revenue are recognized on a net basis whereas CDW recognizes all drop-ship hardware and certain software licenses on a gross basis given that CDW is primarily responsible for fulfilment and acceptability of the specified good. An estimated pro forma adjustment has been made for the impact of recognizing revenue as a principal in transactions related to drop-ship hardware and certain software licenses as if such transactions aligned with CDW’s indicators for gross recognition. CDW is currently in the process of performing its analysis of Sirius’ customer contracts and establishing a plan to align with CDW’s business practices. As a result, the Net sales presentation may materially change as additional information is identified in the future.

 

•

Sirius has inventory financing agreements with certain financial intermediaries to facilitate the purchase of inventory, which are classified as Accounts payable-trade in its historical balance sheet. Such inventory financing agreements share similar terms and characteristics with CDW’s existing agreements, and therefore a pro forma adjustment has been made to conform with CDW’s presentation as Accounts payable-inventory financing.

 

•

Sirius has a different allocation policy for classifying certain payroll expenses as either Cost of sales or Selling and administrative expenses. A pro forma adjustment has been included to conform Sirius’ allocation of payroll expenses to CDW’s policy.

 

S-25

The reclassifications and adjustments made in the preparation of the unaudited pro forma condensed combined financial statements are presented in Note 5 (Transaction Accounting Adjustments to Unaudited Pro Forma Condensed Combined Financial Information). The pro forma financial data may not reflect all reclassifications necessary to conform Sirius’ presentation to CDW’s due to limitations on the availability of information as of the date of this prospectus supplement. Upon completion of the Acquisition, CDW will further review Sirius’ accounting policies. As a result of that review, CDW may identify additional differences between the accounting policies that could materially impact the presentation of the combined financial statements.

Note 4. Preliminary Purchase Consideration and Purchase Price Allocation

Under the acquisition method of accounting, the identifiable assets acquired and liabilities assumed are recorded at their acquisition date fair values. The purchase price allocation is preliminary and based on estimates of the fair value as of September 30, 2021 as well as the estimated purchase consideration that will be subject to final purchase price adjustments in accordance with the terms of the Purchase Agreement when the Acquisition is consummated.

CDW has made certain adjustments to the historical book values of the assets and liabilities of Sirius to reflect preliminary estimates of fair value necessary to prepare the unaudited pro forma condensed combined financial statements, with the excess of the purchase price over the adjusted historical net assets of Sirius recorded as goodwill. Upon final completion of the fair value assessment and determination of the final purchase price consideration, the ultimate purchase price allocation may differ from the preliminary assessment outlined below. Any changes to the initial estimates of the fair value of the assets and liabilities will be allocated to residual goodwill.

The following table summarizes the components of the preliminary purchase price, assuming the Acquisition had been consummated on September 30, 2021:

 

Estimated Consideration (in millions)
Base purchase price		$	2,500
Preliminary purchase price adjustments			(20	)
Acquired cash			70
Total estimated consideration		$	2,550

The table below represents a preliminary allocation of the estimated total consideration for the Acquisition to the net assets acquired based on CDW’s preliminary estimate of their respective fair values:

 

(in millions)		As of September 30, 2021
Cash and cash equivalents		$	70
Accounts receivable			810
Other intangible assets, net			1,131
Goodwill			1,591
Other assets			355
Total assets acquired			3,957
Accounts payable-trade			645
Debt			136
Deferred tax liabilities			242
Other liabilities			384
Total liabilities assumed			1,407
Net assets acquired		$	2,550
Estimated purchase price		$	2,550

 

S-26

The preliminary unaudited pro forma purchase price allocation has been made solely for the purposes of preparing these unaudited pro forma condensed combined financial statements. CDW estimated the fair value of Sirius’ assets and liabilities based on discussions with Sirius’ management, due diligence review in connection with the Acquisition, and other information available to CDW. The analysis was performed at an aggregate level and was based on estimates that are reflective of market participant assumptions. In addition, the estimated fair value of identifiable intangible assets was determined using the income approach which requires, among other things, a projection of all future cash flows, an estimated long-term growth rate, and an estimated discount rate. The table below summarizes the preliminary estimated fair value of identifiable intangible assets acquired, including the estimated useful lives which was used to determine the amortization expense on a straight-line basis.

 

(in millions)		Estimated fair value				Estimated useful lives (in years)				Amortization expense for the year ended December 31, 2020				Amortization expense for the nine months ended September 30, 2021
Customer relationships		$	1,078				11			$	98			$	74
Trade names			53				3				18				13
		$	1,131							$	116			$	87

The final total consideration and amounts allocated to Sirius’ assets and liabilities could differ materially from the preliminary amounts presented in these unaudited pro forma condensed combined financial statements. A decrease in the fair value of Sirius’ assets or an increase in the fair value of Sirius’ liabilities from the preliminary valuations presented would result in a dollar-for-dollar corresponding increase in the amount of goodwill that will result from the Acquisition. In addition, if the value of the property and equipment and identifiable intangible assets is higher than the amounts included in these unaudited pro forma condensed combined financial statements, it may result in higher depreciation and amortization expense than is presented in the unaudited pro forma condensed combined statements of operations. Any such increases could be material and could result in CDW’s actual future financial condition and results of operations differing materially from those presented in the unaudited pro forma condensed combined financial statements.

Note 5. Transaction Accounting Adjustments to Unaudited Pro Forma Condensed Combined Financial Information

The Transaction Accounting Adjustments related to the Acquisition included in the unaudited pro forma condensed combined balance sheet as of September 30, 2021 are as follows:

 

1A.

Reflects the cash payment and retained earnings impact for CDW’s transaction costs that have been incurred or are expected to be incurred in connection with the Acquisition that have not yet been recognized in the historical period. Additionally, reflects cash paid at the closing of the Acquisition to settle any transaction expenses that have been recognized in the historical period and are included in accrued expenses on CDW’s historical balance sheet. Transaction costs include financial advisors, legal services, and professional accounting services related to the Acquisition.

 

1B.

Reflects the settlement of $1 billion of Sirius’ existing debt required to be paid off at the closing of the Acquisition. Such debt will not be assumed by CDW and therefore is included in the overall estimated purchase consideration. The remaining historical debt balance will be assumed by CDW which relates to discounted customer receivables that are not accounted for as a sale under ASC Topic 860, Transfers and Servicing.

 

1C.

Reflects the cash consideration paid to Sirius Computer Solutions Holdco, LP upon the closing of the Acquisition, including cash paid for seller’s transaction costs, such as the $44 million prepayment penalty fee associated with the extinguishment of Sirius’ existing debt. This adjustment also includes purchase accounting adjustments made to Sirius’ historical balances, including:

 

•

The adjustment to record contract liabilities at fair value.

 

S-27

•

The removal of assets and liabilities that are not part of the net assets acquired at the closing of the Acquisition, including deferred rent, liability-classified equity awards which vest and are paid at closing, and deferred commission expense.

 

•

The adjustment to recognize the acquired identifiable intangible assets at their estimated fair value based on a preliminary intangible asset valuation performed in connection with the preliminary allocation of the purchase price. For additional information, refer to Note 4 (Preliminary Purchase Consideration and Purchase Price Allocation).

 

•

The adjustment to recognize the estimated goodwill based on the preliminary allocation of the purchase price.

 

•

The recognition of an additional $81 million in deferred tax liabilities related to the fair value adjustments, principally intangible assets, which were calculated using a statutory income tax rate of 26.1%. This adjustment also includes the subsequent reclassification of CDW’s deferred tax assets to deferred tax liabilities of $14 million in accordance with the jurisdictional netting requirements of ASC Topic 740, Income Taxes.

 

•

The removal of the $121 million excess maximum cash balance that remains with Sirius Computer Solutions Holdco, LP in accordance with the Purchase Agreement.

 

•

The removal of the historical equity of Sirius.

 

1D.

Reflects the cash payment for the representation and warranty insurance policy required to be obtained by CDW at the closing of the Acquisition and recognition of the related prepaid insurance asset which will be amortized over the six-year term of the policy.

 

1E.

Reflects the recognition of the estimated right-of-use asset and lease liability in accordance with Topic 842, to conform with CDW’s accounting policy for leases. Upon completion of the Acquisition, CDW will complete the detailed analysis which may result in additional adjustments.

 

1F.

Reflects the sales return reserve and related right of return asset recorded for estimated returns arising from the Sirius net to gross revenue adjustment discussed in 2A below.

 

1G.

Reflects the reclassification of Sirius’ inventory financing payable out of accounts payable and to the accounts payable—inventory financing line item to conform to CDW’s presentation.

The Transaction Accounting Adjustment related to the financing of the Acquisition that is included in the unaudited pro forma condensed combined balance sheet as of September 30, 2021 is as follows:

 

1H.

Reflects the issuance of $2.5 billion of notes to finance the Acquisition, less an estimated $22 million in debt issuance costs related to the financing.

The Transaction Accounting Adjustments related to the Acquisition that are included in the unaudited pro forma condensed combined statements of operations for the year ended December 31, 2020 and nine months ended September 30, 2021 are as follows:

 

2A.

Reflects the preliminary estimated reclassification of cost of sales related to sales of drop-ship hardware and certain software licenses recognized on a net basis in Sirius’ historical statement of operations out of Net sales and into Cost of sales as described in Note 3 (Accounting Policies), net of expected returns. This adjustment is subject to further detailed analysis and assessment that is ongoing as of this time.

 

2B.

Reflects the amortization of the fair value adjustment to contract liabilities recorded at the closing of the Acquisition.

 

2C.

Reflects the reclassification of certain payroll expenses from Selling and administrative expense in Sirius’ historical statements of operations to Cost of sales to conform with CDW’s historical presentation. For additional information, refer to Note 3 (Accounting Policies).

 

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2D.

Reflects the removal of historical expenses related to:

 

•

Amortization of pre-acquisition intangible assets of Sirius. The post-closing amortization expense on the newly recorded intangible assets is recorded in 2E below, and

 

•

Interest expense on Sirius’ historical debt balances which will be paid off at the closing of the Acquisition.

 

2E.

Reflects the amortization of the intangible assets recorded upon the closing of the Acquisition. For additional information, refer to Note 4 (Preliminary Purchase Consideration and Purchase Price Allocation).

 

2F.

Reflects the estimated expenses incurred related to retention awards preliminarily determined:

 

•

$27 million of cash retention awards to be issued at the closing of the Acquisition, which are expected to vest over 13 months and will be expensed ratably over the vesting period, and

 

•

$23 million of equity-based retention awards, primarily restricted stock units, to be issued at the closing of the Acquisition which are expected to vest over an average 4-year period and will be expensed ratably over the vesting period.

 

2G.

Reflects the expense incurred upon vesting of existing Sirius equity awards which will vest immediately upon the change in control and will be expensed and paid out upon the closing of the Acquisition.

 

2H.

Reflects the amortization of the representation and warranty insurance policy capitalized at the closing of the Acquisition. The prepaid asset recorded will be amortized over the six-year term of the policy.

 

2I.

Reflects the expense recognized for transaction costs that have been incurred or are expected to be incurred in connection with the Acquisition that have not yet been recognized in the historical periods. This adjustment primarily includes an estimated prepayment penalty fee of $44 million related to the payoff of certain outstanding debt balances of Sirius which will be settled in conjunction with the closing of the Acquisition.

 

2J.

Reflects the adjustment to CDW’s income tax expense resulting from the Acquisition-related pro forma adjustments. The estimated income tax rate applied to the pro forma adjustments for both the year ended December 31, 2020 and nine months ended September 30, 2021 is 26.1%. The estimated pro forma blended statutory rate and all other tax amounts are stated at their historical amounts as the combined company’s overall effective tax rate has not yet been determined.

The Transaction Accounting Adjustment related to the financing of the Acquisition included in the unaudited pro forma condensed combined statements of operations for the year ended December 31, 2020 and nine months ended September 30, 2021 is as follows:

 

2K.

Reflects interest expense on the notes offered hereby to be used to fund the Acquisition, including the estimated amortization of debt issuance costs, and the related income tax benefit from the pro forma impact. The pro forma adjustment to record interest expense assumes the notes were issued on January 1, 2020 and were outstanding for the entire year ended December 31, 2020 and nine months ended September 30, 2021. For purposes of calculating this pro forma adjustment, an assumed blended interest rate of 2.84% per annum on the notes was used based on prevailing circumstances existing near the filing date of this prospectus supplement at the applicable assumed fixed interest rates for a mix of maturities.

The assumed blended interest rate represents CDW’s best estimate of the blended interest rate for the notes offered hereby. The final interest rates for the notes may differ from the blended interest rate assumed in the pro forma financial statements. A 1/8% increase or decrease in the assumed interest rate would result in a change in interest expense of approximately $3 million for the year ended December 31, 2020 and approximately $2 million for the nine months ended September 30, 2021.

 

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Note 6. Earnings per Share

Represents the earnings per share calculated using the historical weighted average shares outstanding, and the issuance of additional equity awards in connection with the Acquisition, assuming the equity awards were outstanding since January 1, 2020. As the Acquisition is being reflected as if it had occurred at the beginning of the periods presented, the calculation of weighted average shares outstanding for basic and diluted earnings per share assumes that the equity awards issuable relating to the Acquisition have been outstanding for the entire periods presented. The issuance of additional equity awards has no impact to the basic weighted-average shares outstanding on a pro forma basis for both the year ended December 31, 2020 and nine months ended September 30, 2021.

 

		For the year ended December 31, 2020				For the nine months ended September 30, 2021
(in millions, except per share amounts)
Pro forma net income		$	650			$	759
Basic pro forma weighted-average shares outstanding			142.6				139.5
Historical diluted weighted-average shares outstanding			144.8				141.4
Additional diluted shares on equity-based retention awards			—				0.1
Diluted pro forma weighted average shares outstanding			144.8				141.5
Basic pro forma earnings per share attributable to common stockholders		$	4.56			$	5.44
Diluted pro forma earnings per share attributable to common stockholders		$	4.49			$	5.37

 

 

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DESCRIPTION OF NOTES

CDW LLC (“CDW”) and CDW Finance Corporation (“FinanceCo,” and together with CDW, the “Issuers”) will issue the notes under the indenture dated December 1, 2014 (the “Base Indenture”) among CDW LLC, CDW Finance Corporation, the Guarantors and U.S. Bank National Association, as trustee (the “Trustee”), as supplemented to reflect certain terms of the     % senior notes due 20     (the “20     Senior Notes”) by a seventh supplemental indenture to be dated on or about             , 2021 (the “Seventh Supplemental Indenture”), to reflect certain terms of the     % senior notes due 20     (the “20     Senior Notes”) by an eighth supplemental indenture to be dated on or about             , 2021 (the “Eighth Supplemental Indenture”) and to reflect certain terms of the     % senior notes due 20     (the “20     Senior Notes,” and together with the 20     Senior Notes, the “Notes”) by a ninth supplemental indenture to be dated on or about             , 2021 (the “Ninth Supplemental Indenture,” and together with the Base Indenture, the Seventh Supplemental Indenture and the Eighth Supplemental Indenture, the “Indenture”) among CDW LLC, CDW Finance Corporation, the Guarantors and the Trustee. The terms of the Notes include those stated in the Indenture and those expressly made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (the “Trust Indenture Act”).

In this description, the term “Issuers” refers only to CDW LLC and CDW Finance Corporation and not to any of their Subsidiaries, the term “CDW” refers only to CDW LLC and not to any of its Subsidiaries. CDW Finance Corporation was formed on August 6, 2010 for the sole purpose of acting as a co-Issuer of debt securities and does not have any material assets. For a description of restrictions on CDW Finance Corporation’s activities, see “—Certain Covenants—Restrictions on Activities of CDW Finance Corporation.”

The following description is a summary of the material provisions of the Indenture, the Notes and the Guarantees. The following description does not restate these documents in their entirety. You are encouraged to read these documents because they, and not this description, define your rights as Holders of the Notes.

Certain defined terms used in this description but not defined below under “—Certain Definitions” have the meanings assigned to them in the Indenture.

The registered Holder of a Note will be treated as the owner of it for all purposes. Only registered Holders will have rights under the Indenture.

Brief Description of the Notes and the Guarantees

The Notes and the Guarantees thereof:

 

•

will be general unsecured senior obligations of the Issuers and the Guarantors;

 

•

will rank senior in right of payment to any future Subordinated Indebtedness of the Issuers and Guarantors;

 

•

will rank equally in right of payment with all existing and future senior Indebtedness of the Issuers and the Guarantors, including the 2024 Senior Notes, the 2025 Senior Notes, the 2028 Senior Notes, the 2029 Senior Notes and the Senior Credit Facilities;

 

•

will be effectively subordinated to any existing and future Secured Indebtedness of the Issuers and the Guarantors to the extent of the value of the assets securing such Secured Indebtedness;

 

•

will be effectively subordinated to any existing and future obligations under the Existing Inventory Financing Agreements and other similar inventory financing agreements that are secured by a Lien to the extent of the value of the assets securing such obligations;

 

•

will be structurally subordinated to any existing and future indebtedness and liabilities of non-guarantor Subsidiaries; and

 

•

will be initially unconditionally guaranteed on a joint and several and senior basis by CDW Corporation (the “Parent”) and each Restricted Subsidiary that guarantees the Senior Credit Facilities.

 

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Substantially all of the operations of CDW are conducted through its Subsidiaries, but not all of CDW’s Subsidiaries will Guarantee the Notes. Unless a Subsidiary is a Guarantor, claims of creditors of such Subsidiary, including trade creditors, and claims of preferred stockholders (if any) of such Subsidiary generally will have priority with respect to the assets and earnings of such Subsidiary over the claims of creditors of CDW, including Holders of the Notes. The Notes, therefore, will be structurally subordinated to creditors (including trade creditors) and preferred stockholders (if any) of Subsidiaries of CDW that are not Guarantors. For the nine months ended September 30, 2021, the non-guarantor Subsidiaries generated approximately 12% and 7% of CDW’s net sales and net income, respectively. In addition, as of September 30, 2021, the non-guarantor Subsidiaries held approximately 16% of CDW’s consolidated total assets and approximately 10% of CDW’s total liabilities, all of which would have been structurally senior to the Notes. See “Risk Factors—Risks Related to the Notes—The notes are structurally subordinated to all indebtedness of our existing or future subsidiaries that do not become guarantors of the notes.”

The Indebtedness evidenced by the Notes is unsecured senior Indebtedness of the Issuers and the Guarantors, and as such, will be effectively subordinated to any Secured Indebtedness or other secured obligations of the Issuers and the Guarantors to the extent of the value of the assets securing such Secured Indebtedness. As of September 30, 2021, CDW and its Subsidiaries had approximately $1,591.5 million of Secured Indebtedness outstanding. We expect to replace substantially all of our Secured Indebtedness with unsecured indebtedness upon the closing of the Refinancing. See “Risk Factors—Risks Related to the Notes—The notes will be unsecured and will be effectively subordinated to our and our guarantors’ secured debt.”

Principal, Maturity and Interest

The Issuers will issue $        million in aggregate principal amount of 20     Senior Notes, $        million in aggregate principal amount of 20     Senior Notes and $         million in aggregate principal amount of 20     Senior Notes in this offering. The Issuers may issue additional Notes of any series under the Indenture from time to time after this offering. The Notes and any additional Notes of the same series contemporaneously or subsequently issued under the Indenture will be treated as a single class for all purposes under the Indenture, including, without limitation, waivers, amendments, redemptions and offers to purchase. It is possible, however, that the Notes and any other additional Notes of the same series will not be treated as part of the same issue for U.S. federal income tax purposes. The Issuers will issue the Notes in denominations of $2,000 and integral multiples of $1,000 in excess of $2,000. The 20     Senior Notes will mature on             , 20    . The 20     Senior Notes will mature on             , 20    . The 20     Senior Notes will mature on             , 20    .

Interest on the 20     Senior Notes will accrue at the rate of     % per annum and will be payable semi-annually in arrears on                      and                     , commencing on             , 2022. The Issuers will make each interest payment to the Holders of record on the immediately preceding                      and                     .

Interest on the 20     Senior Notes will accrue at the rate of     % per annum and will be payable semi-annually in arrears on                      and                     , commencing on             , 2022. The Issuers will make each interest payment to the Holders of record on the immediately preceding                      and                     .

Interest on the 20     Senior Notes will accrue at the rate of     % per annum and will be payable semi-annually in arrears on                      and                     , commencing on             , 2022. The Issuers will make each interest payment to the Holders of record on the immediately preceding                      and                     .

Interest is computed on the basis of a 360-day year comprised of twelve 30-day months. Interest accrues from the date it was most recently paid.

Paying Agent and Registrar for the Notes

CDW will maintain one or more paying agents (each, a “paying agent”) for the Notes within the City and State of New York.

 

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CDW will also maintain one or more registrars (each, a “registrar”) and a transfer agent. The Trustee will serve as initial registrar and transfer agent at its corporate trust office. The registrar and the transfer agent will maintain a register reflecting ownership of Notes outstanding from time to time and will make payments on and facilitate transfer of Notes on behalf of CDW at the office or agency of the registrar within the City and State of New York.

CDW may change the paying agents, the registrars or the transfer agents without prior notice to the Holders. CDW or any Restricted Subsidiary may act as a paying agent or registrar.

Transfer and Exchange

A Holder may transfer or exchange Notes in accordance with the Indenture. The registrar and the Trustee may require a Holder to furnish appropriate endorsements and transfer documents in connection with a transfer of Notes. Holders will be required to pay all taxes due on transfer. CDW is not required to transfer or exchange any Note selected for redemption. Also, CDW is not required to transfer or exchange any Note for a period of 15 days before a selection of Notes to be redeemed.

Guarantees

The Guarantors will jointly and severally fully and unconditionally guarantee, on a senior unsecured basis, the performance and full and punctual payment when due, whether at maturity, by acceleration or otherwise, of all obligations of the Issuers under the Notes, whether for payment of principal of, premium, if any, or interest in respect of the Notes, expenses, indemnification or otherwise, on the terms set forth in the Indenture.

Parent and the Restricted Subsidiaries which guarantee the Senior Credit Facilities will initially guarantee the Notes at such time as they guarantee the Senior Credit Facilities (which is expected to be within 30 days after the Acquisition is consummated in the case of Target and its Subsidiaries and the Issue Date in the case of CDW’s other Subsidiary Guarantors). Each of the Guarantees of the Notes will be a general unsecured senior obligation of each Guarantor.

The obligations of each Guarantor (other than a company that is a direct or indirect parent of CDW) under its Guarantee will be limited as necessary to prevent the Guarantee from constituting a fraudulent conveyance under applicable law.

Any entity that makes a payment under its Guarantee will be entitled upon payment in full of all guaranteed obligations under the Indenture to a contribution from each other Guarantor in an amount equal to such other Guarantor’s pro rata portion of such payment based on the respective net assets of all the Guarantors at the time of such payment determined in accordance with GAAP.

If a Guarantee were rendered voidable, it could be subordinated by a court to all other indebtedness (including guarantees and other contingent liabilities) of the Guarantor, and, depending on the amount of such indebtedness, a Guarantor’s liability on its Guarantee could be reduced to zero. See “Risk Factors—Risks Related to the Notes—Federal and state statutes allow courts, under specific circumstances, to void notes and adversely affect the validity and enforceability of the guarantees and require noteholders to return payments received.”

Each Guarantor may consolidate with or merge into or sell its assets to CDW or another Guarantor without limitation, or with, into or to any other Persons upon the terms and conditions set forth in the Indenture. See “—Certain Covenants—Merger, Consolidation or Sale of Assets.” The Guarantee of a Guarantor will be automatically released and discharged in the event that:

(a)    the sale, disposition or other transfer (including through merger or consolidation) of (x) Capital Stock of the applicable Guarantor (including any sale, disposition or other transfer), after which, in the case of a subsidiary Guarantor, such Guarantor is no longer a Restricted Subsidiary, or (y) all or substantially all the assets of such Guarantor; provided that, in each case, such sale, disposition or other transfer is made in compliance with the provisions of the Indenture;

 

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(b)    [Reserved];

(c)    in the case of any Restricted Subsidiary which after the Issue Date is required to guarantee the Notes pursuant to the covenant described under “—Certain Covenants—Additional Guarantees,” the release or discharge of the guarantee by such Restricted Subsidiary of all of the Indebtedness of CDW or any Restricted Subsidiary or the repayment of all of the Indebtedness or Disqualified Stock, in each case, which resulted in the obligation to guarantee the Notes;

(d)    CDW exercises its legal defeasance option or its covenant defeasance option as described under “—Legal Defeasance and Covenant Defeasance” or its obligations under the Indenture are discharged in accordance with the terms of the Indenture; or

(e)    such Guarantor is also a guarantor or borrower under the Senior Credit Facilities and, at the time of release of its Guarantee, (x) has been released from its guarantee of the Senior Credit Facilities (which may be conditioned on the concurrent release hereunder) except as a result of a discharge or release arising from payment under such guarantee and (y) does not guarantee (and is not required to guarantee pursuant to the covenant described under “—Certain Covenants—Additional Guarantees”) any Indebtedness of CDW or any Restricted Subsidiaries (other than any guarantee that will be released upon the release of the Guarantee hereunder).

Optional Redemption

Prior to the applicable Par Call Date (as defined below), the Issuers may redeem the 20     Senior Notes, 20     Senior Notes or the 20     Senior Notes at their option at any time, either in whole or in part, upon at least 15 days, but not more than 60 days, prior notice given by mail to the registered address of each Holder of the Notes to be redeemed or otherwise delivered electronically to Holders of global notes, with a copy to the Trustee. If the Issuers elect to redeem the Notes prior to the applicable Par Call Date, they will pay a redemption price equal to the greater of the following amounts, plus, in each case, accrued and unpaid interest thereon to, but not including, the redemption date:

 

•

100% of the aggregate principal amount of the Notes to be redeemed on the redemption date; or

 

•

the sum of the present values of the Remaining Scheduled Payments.

In determining the present values of the Remaining Scheduled Payments, CDW will discount such payments to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) using a discount rate equal to the Treasury Rate plus     % in the case of the 20     Senior Notes,     % in the case of the 20     Senior Notes and     % in the case of the 20     Senior Notes.

In addition, at any time and from time to time, on or after the applicable Par Call Date, the Issuers may redeem the 20     Senior Notes, 20     Senior Notes and the 20     Senior Notes at their option, either in whole or in part, upon at least 15 days, but not more than 60 days, prior notice given by mail to the registered address of each Holder of the Notes to be redeemed or otherwise delivered electronically to Holders of global notes, with a copy to the Trustee, at a redemption price equal to 100% of the aggregate principal amount of the Notes to be redeemed on the redemption date, plus accrued and unpaid interest on such notes to, but excluding, the redemption date. Except as set forth above and under “—Special mandatory redemption,” the 20     Senior Notes are not redeemable prior to             , 20    , the 20     Senior Notes are not redeemable prior to             , 20     and the 20     Senior Notes are not redeemable prior to             , 20    .

The following terms are relevant to the determination of the redemption price:

“Treasury Rate” means, with respect to any redemption date:

 

•

the arithmetic average (rounded to the nearest 1/100th of a percentage point) of the yields for the immediately preceding full week published in the most recent Federal Reserve Statistical Release H.15

 

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(or if such statistical release is no longer published or the relevant information is no longer available thereon, any such other reasonably comparable index published weekly by the Board of Governors of the Federal Reserve System) that has become publicly available prior to the date of determination and which establishes yields on actively traded United States Treasury securities adjusted to constant maturity under the caption “Treasury Constant Maturities,” for the maturity corresponding to the Comparable Treasury Issue; provided that if no maturity is within three months before or after the maturity date for such Notes (assuming, for this purpose, that the Notes matured on the applicable Par Call Date in the case of the 20     Senior Notes, the 20     Senior Notes and the 20     Senior Notes), yields for the two published maturities most closely corresponding to the Comparable Treasury Issue will be determined and the Treasury Rate will be interpolated or extrapolated from those yields on a straight line basis rounding to the nearest month; or

 

•

if that release, or any successor release, is not published during the week preceding the calculation date or does not contain such yields, the rate per annum equal to the semiannual equivalent yield to maturity of the Comparable Treasury Issue, calculated using a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for that redemption date.

The Treasury Rate will be calculated on the third business day preceding the redemption date.

“Comparable Treasury Issue” means the United States Treasury security selected by an Independent Investment Banker as having an actual or interpolated maturity comparable to the remaining term of the notes to be redeemed (assuming, for this purpose, that the Notes matured on the applicable Par Call Date in the case of the 20     Senior Notes, the 20     Senior Notes and the 20     Senior Notes) that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of such notes.

“Comparable Treasury Price” means, with respect to any redemption date, (1) the arithmetic average of three Reference Treasury Dealer Quotations for such redemption date after excluding the highest and lowest Reference Treasury Dealer Quotations, or (2) if the Independent Investment Banker obtains fewer than five Reference Treasury Dealer Quotations, the arithmetic average of all Reference Treasury Dealer Quotations for such redemption date.

“Independent Investment Banker” means one of J.P. Morgan Securities LLC, BofA Securities, Inc., Morgan Stanley & Co. LLC and Wells Fargo Securities, LLC or their respective successors, as may be appointed from time to time by CDW.

“Par Call Date” with respect to the 20     Senior Notes, shall mean at any time on or after             , 20    , with respect to the 20     Senior Notes, shall mean at any time on or after             , 20     and with respect to the 20     Senior Notes, shall mean at any time on or after             , 20    .

“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any redemption date, the arithmetic average, as determined by the Independent Investment Banker, of the bid and asked prices for the Comparable Treasury Issue (expressed, in each case, as a percentage of its principal amount) quoted in writing to the Independent Investment Banker by such Reference Treasury Dealer as of 5:00 p.m., New York City time, on the third business day preceding such redemption date.

“Reference Treasury Dealer” means each of (1) J.P. Morgan Securities LLC, BofA Securities, Inc., Morgan Stanley & Co. LLC and Wells Fargo Securities, LLC or their affiliates, and their respective successors and (2) one other primary U.S. Government securities dealer in New York City (a “primary treasury dealer”) selected by CDW and its successors; provided, however, that if any of the foregoing shall cease to be a primary treasury dealer, CDW shall substitute therefor another primary treasury dealer.

 

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“Remaining Scheduled Payments” means, with respect to any Note to be redeemed, the remaining scheduled payments of the principal thereof and interest thereon that would be due after the related redemption date but for such redemption (assuming, for this purpose, that the notes matured on the applicable Par Call Date); provided, however, that, if such redemption date is not an interest payment date with respect to such Note, the amount of the next scheduled interest payment thereon will be reduced by the amount of interest accrued thereon to such redemption date.

Special Mandatory Redemption

If (i) the consummation of the Sirius Acquisition does not occur on or before 11:59 p.m. New York City time on October 11, 2022, (ii) we notify the Trustee and the Holders that we will not pursue the consummation of the Sirius Acquisition or (iii) the Purchase Agreement has been terminated without the consummation of the Sirius Acquisition (each of (i), (ii) and (iii), a “Special Mandatory Redemption Trigger”), we will be required to redeem each series of Notes then outstanding (such redemption, the “Special Mandatory Redemption”) at a redemption price equal to 101% of the principal amount of the Notes of each series plus accrued and unpaid interest, if any, to, but excluding, the Special Mandatory Redemption Date (the “Special Mandatory Redemption Price”).

In the event that we become obligated to redeem the Notes pursuant to the Special Mandatory Redemption, we will promptly, and in any event not more than five business days after the date on which a Special Mandatory Redemption Trigger occurred, deliver notice of the Special Mandatory Redemption to the Trustee and the Holders which shall stipulate the date upon which the Notes of each series will be redeemed (the “Special Mandatory Redemption Date,” which date shall be on or about the fifth business day following the date of such notice) together with a notice of Special Mandatory Redemption for the Trustee to deliver to each Holder of such series of Notes. At our request, given at least two business days before such notice is to be sent, the Trustee will then promptly mail, or electronically deliver, according to the procedures of DTC, such notice of Special Mandatory Redemption to each Holder of such series. Unless we default in payment of the Special Mandatory Redemption Price, on and after such Special Mandatory Redemption Date, interest will cease to accrue on each series of Notes.

Notwithstanding the foregoing, installments of interest on the Notes of each series that are due and payable on interest payment dates falling on or prior to the Special Mandatory Redemption Date will be payable on such interest payment dates to Holders of such Notes as of the close of business on the relevant record dates in accordance with the Notes and the Indenture.

Mandatory Redemption

Except as set forth above under “Special Mandatory Redemption,” the Issuers are not required to make mandatory redemption or sinking fund payments with respect to the Notes. However, under certain circumstances, the Issuers may be required to offer to purchase Notes as described under “—Repurchase at the Option of Holders—Change of Control Repurchase Event.” The Issuers may at any time and from time to time purchase Notes in the open market or otherwise as permitted by the Indenture.

Repurchase at the Option of Holders

Change of Control

If a Change of Control Repurchase Event occurs with respect to the Notes of a series, unless CDW at such time has given notice of redemption under “—Optional Redemption” with respect to all outstanding Notes of such series, each Holder of the Notes of such series will have the right to require CDW to repurchase all or any part (equal to $2,000 or integral multiples of $1,000 in excess thereof) of that Holder’s Notes of that series pursuant to an offer on the terms set forth in the Indenture (a “Change of Control Offer”). In the Change of Control Offer, CDW will offer a payment (a “Change of Control Payment”) in cash equal to 101% of the

 

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