Item 1.01
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Entry into a Material Definitive Agreement.
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On July 14, 2017 (the Effective
Date), Constellation Brands, Inc. (the Company), CIH International S.à r.l., an indirect wholly owned subsidiary of the Company organized under the laws of Luxembourg (CIH), CIH Holdings S.à r.l., an
indirect wholly owned subsidiary of the Company organized under the laws of Luxembourg (Holdings), CB International Finance S.à r.l., an indirect wholly owned subsidiary of the Company organized under the laws of Luxembourg
(CB International and together with CIH, the European Borrowers and the European Borrowers together with the Company, the Borrowers), Bank of America, N.A., as administrative agent (the Administrative
Agent), and certain other lenders (the Lenders), entered into a Restatement Agreement (the Restatement Agreement) that amended and restated the Fifth Amended and Restated Credit Agreement dated as of October 13,
2016, by and among the Company, CIH, Holdings, CB International, the Administrative Agent and the other lenders thereto (the Fifth Restated Credit Agreement and as amended and restated by the Restatement Agreement, the Sixth
Restated Credit Agreement).
The principal changes to the Fifth Restated Credit Agreement effected by the Restatement Agreement are
(i) the refinance and increase of the existing U.S. Term A-1 loan facility with a new $500,000,000 term facility (the New U.S. Term A-1 Facility) and extension of its maturity to July 14, 2024, (ii) the creation of a new
$2,000,000,000 European Term A loan facility (the New European Term A Facility) into which the existing European Term A loan facility, European Term A-1 loan facility and European Term A-2 loan facility have been combined, (iii) the
increase of the Revolving Credit Facility by $350,000,000 to $1,500,000,000 and extension of its maturity to July 14, 2022, (iv) a decrease in the Companys leverage ratio requirement, as defined in the Sixth Restated Credit
Agreement, under the Incremental Facilities (as defined below) from no greater than 4.50 to 1.00 to no greater than 4.00 to 1.00, and (v) the removal of Holdings as a borrower under the Sixth Restated Credit Agreement. The Company is the
borrower under the New U.S. Term A-1 Facility. CIH is the borrower under the New European Term A Facility.
In addition, certain
representations and warranties and affirmative and negative covenants were eliminated or modified by the Restatement Agreement. Also, the Company and certain of its subsidiaries entered into an Amended and Restated Guarantee Agreement and the
European Borrowers entered into an Amended and Restated Cross-Guarantee Agreement.
The New U.S. Term A-1 Facility
The New U.S. Term A-1 Facility loans will be repaid in the same manner as the pre-existing U.S. Term A-1 loans. They will be repaid in
quarterly payments of principal equal to 0.25% of the original aggregate principal amount of the New U.S. Term A-1 Facility loans, with the balance payable on July 14, 2024. The maturity date of the New U.S. Term A-1 Facility was adjusted in
the Sixth Restated Credit Agreement to be seven years from the Effective Date.
The rate of interest payable on the New U.S. Term A-1
Facility loan, at the Companys option, is equal to (i) LIBOR plus a margin, or (ii) the Base Rate plus a margin. The margin for the New U.S. Term A-1 Facility loans is adjustable based upon the Companys Debt Rating, as defined
in the Sixth Restated Credit Agreement, and is between 1.50% and 2.05% for LIBOR borrowings and 0.50% and 1.05% for Base Rate borrowings. The margin will be reset after 3.5 years pursuant to a formula set forth in the Sixth Restated Credit
Agreement.
The obligations under the New U.S. Term A-1 Facility are guaranteed by certain of the Companys U.S. subsidiaries. These
obligations are not secured.
On the Effective Date, the Company repaid all outstanding amounts under the existing U.S. Term
A-1 facility.
The New European Term A Facility
The New European Term A Facility consists of a term loan that will be repaid in quarterly payments of principal equal to 1.25% of the original
aggregate principal amount of the New European Term A Facility loan, with the balance payable on July 14, 2020.
The rate of interest
payable on the New European Term A Facility loan, at CIHs option, is equal to (i) LIBOR plus a margin, or (ii) the Base Rate plus a margin. The margin for the New European Term A Facility loan is adjustable based upon the
Companys Debt Rating, as defined in the Sixth Restated Credit Agreement, and is between 1.00% and 1.75% for LIBOR borrowings and 0.00% and 0.75% for Base Rate borrowings.
The obligations under the New European Term A Facility are guaranteed by (i) the Company and certain of the Companys U.S.
subsidiaries and (ii) the European Borrowers pursuant to the Amended and Restated Cross Guarantee Agreement (as defined below). These obligations are not secured.
On the Effective Date, CIH and Holdings repaid all outstanding amounts under the existing European Term A facility, European Term A-1 facility
and European Term A-2 facility.
Revolving Credit Facility
The Revolving Credit Facility was increased by $350,000,000 to $1,500,000,000. The European Borrowers may borrow up to $1,310,000,000 and the
Company may borrow up to the full $1,500,000,000. The maturity date of the Revolving Credit Facility was adjusted in the Sixth Restated Credit Agreement to be five years from the Effective Date.
The rate of interest payable on the Revolving Credit Facility, at the applicable Borrowers option, is equal to (i) LIBOR plus a
margin, or (ii) the Base Rate plus a margin. The margin for the Revolving Credit Facility is adjustable based upon the Companys Debt Rating, as defined in the Sixth Restated Credit Agreement, and is between 1.00% and 1.75% for LIBOR
borrowings and 0.00% and 0.75% for Base Rate borrowings.
The Companys obligations under the U.S. Revolving Credit Facility are
guaranteed by certain of the Companys U.S. subsidiaries. The applicable European Borrowers obligations under the European Revolving Credit Facility are guaranteed by (i) the Company and certain of the Companys U.S.
subsidiaries and (ii) the other European Borrower pursuant to the Amended and Restated Cross Guarantee Agreement. These obligations are not secured.
As of July 14, 2017, the Borrowers had $348,000,000 of outstanding revolving credit loans under the Sixth Restated Credit Agreement.
Incremental Facilities
The Fifth
Restated Credit Agreement set forth the maximum aggregate amount by which the Company may elect, subject to the willingness of existing or new lenders to fund such increase or term loans and other customary conditions, to increase the Lenders
revolving credit commitments or add one or more tranches of additional term loans (the Incremental Facility). The Incremental Facility included a flexible cap of $750,000,000 plus an unlimited amount so long as, on a pro forma basis, the
Companys leverage ratio, as defined in the Fifth Restated Credit Agreement, is no greater than 4.50 to 1.00 as of the
last day of the most recent fiscal quarter for which financial statements have been delivered pursuant to the Fifth Restated Credit Agreement. The Incremental Facility was retained in the Sixth
Restated Credit Agreement, but the leverage ratio requirement was adjusted to no greater than 4.00 to 1.00 subject to certain limitations set forth in the Sixth Restated Credit Agreement.
Amended and Restated Guarantee Agreement
The Company and certain of its subsidiaries (the Guarantors) executed an Amended and Restated Guarantee Agreement, dated as of
July 14, 2017 (the Amended and Restated Guarantee Agreement), pursuant to which: (i) the Company unconditionally and irrevocably guaranteed the borrowings of the European Borrowers under the Sixth Restated Credit Agreement,
(ii) each of the subsidiary Guarantors unconditionally and irrevocably guaranteed to the Administrative Agent, for the ratable benefit of the Lenders, the prompt and complete payment and performance of the indebtedness and other monetary
obligations of the Borrowers under the Sixth Restated Credit Agreement, and (iii) certain subsidiaries of the Company were released as guarantors of the borrowings of the Company under the Sixth Restated Credit Agreement.
Amended and Restated Cross-Guarantee Agreement
CIH, CB International and the Administrative Agent entered into an Amended and Restated Cross-Guarantee Agreement, dated as of July 14,
2017 (the Amended and Restated Cross-Guarantee Agreement), which amends and restates the existing agreement, dated as of October 13, 2016, by and among CIH, Holdings, CB International and the Administrative Agent. Pursuant to the
Amended and Restated Cross-Guarantee Agreement, CIH and CB International have each unconditionally and irrevocably guaranteed to the Administrative Agent, for the ratable benefit of the Lenders, the obligations of each other under the Sixth Restated
Credit Agreement. Holdings is no longer a party to the Amended and Restated Cross-Guarantee Agreement and does not guarantee any obligations.
Other
Certain of the Lenders, the Administrative Agent and their affiliates have performed, and may in the future perform, various
commercial banking, investment banking, lending, underwriting and brokerage services, and other financial and advisory services for the Company and its subsidiaries for which they have received, and will receive, customary fees and expenses. The
Company and certain of its subsidiaries have, and may in the future, enter into derivative arrangements with certain of the Lenders and their affiliates. In addition, one of the Lenders is the trustee under an indenture for certain of the
Companys outstanding notes. Certain of the Lenders or their affiliates and affiliates of the Administrative Agent are lenders under certain credit facilities to a Sands family investment vehicle that, because of its relationship with members
of the Sands family, is an affiliate of the Company. Such credit facilities are secured by pledges of shares of class A common stock of the Company, class B common stock of the Company, or a combination thereof and personal guarantees of certain
members of the Sands family, including Richard Sands and Robert Sands. In addition, one of the Companys executive officers is a member of the boards of directors of one of the Lenders and certain of its affiliates.
The foregoing description of the Restatement Agreement, Amended and Restated Guarantee Agreement and Amended and Restated Cross-Guarantee
Agreement is a summary and is qualified in its entirety by reference to the Restatement Agreement, Amended and Restated Guarantee Agreement and Amended and Restated Cross-Guarantee Agreement, copies of which are filed as Exhibit 4.1, Exhibit 10.1
and Exhibit 10.2, respectively, to this Current Report on Form 8-K and incorporated herein by reference.