Constellation Brands, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Borrowings

Borrowings

6 Months Ended

Aug. 31, 2015

Debt Disclosure [Abstract]

BORROWINGS

BORROWINGS:

Borrowings consist of the following:



	August 31, 2015						February 28, 2015
	Current		Long-term		Total		Total
(in millions)
Notes payable to banks
Senior Credit Facility – Revolving Credit Loans	$	—	$	—	$	—	$	—
Other	29.3		—		29.3		52.4
	$	29.3	$	—	$	29.3	$	52.4

Long-term debt
Senior Credit Facility – Term Loans	$	137.5	$	2,806.1	$	2,943.6	$	2,792.1
Senior Notes	—		4,349.1		4,349.1		4,348.6
Other	18.6		83.0		101.6		154.9
	$	156.1	$	7,238.2	$	7,394.3	$	7,295.6

Senior credit facility –

On July 16, 2015, the Company, CIH International S.à r.l., an indirect wholly-owned subsidiary of ours (“CIH” and together with the Company, the “Borrowers”), Bank of America, N.A., as administrative agent (the “Administrative Agent”), and certain lenders (all such parties other than either of the Borrowers and the Administrative Agent are collectively referred to as the “Lenders”) entered into Amendment No. 2 (the “Amendment”) to our then-existing senior credit facility (as amended, the “2015 Credit Agreement”). The Amendment was entered into primarily for (i) the creation of a new $1.27 billion U.S. Term A loan facility into which the existing U.S. Term A and Term A-2 loan facilities have been combined and increased by $200.0 million, (ii) the refinance of the existing U.S. Term A-1 loan facility and extension of its maturity to July 16, 2021, (iii) the creation of a new $1.43 billion European Term A loan facility into which the existing European Term A and Term B-1 loan facilities have been combined, (iv) the extension of the maturity date of all tranches, other than the new U.S. Term A-1 loan facility, to July 16, 2020, and (v) the increase of the revolving credit facility by $300.0 million to $1.15 billion. The 2015 Credit Agreement was used to refinance the outstanding obligations under our then-existing senior credit facility, with the incremental $200.0 million of borrowings under the new U.S. Term A loan facility used to finance a portion of the purchase price for the acquisition of Meiomi.

The Amendment also modified certain of our financial and other covenants, and provides for the automatic revision of certain covenants (including financial covenants) and the suspension of the Incremental Cap (as defined below) and the collateral requirements under the 2015 Credit Agreement if we receive an Investment Grade Rating (as defined in the 2015 Credit Agreement) on our corporate ratings from each of S&P and Moody’s, and no default or event of default has occurred or is continuing (a “Covenant Suspension Period”). A Covenant Suspension Period will continue until such time as any of our corporate ratings cease to be an Investment Grade Rating.

The 2015 Credit Agreement provides for aggregate credit facilities of $4,093.6 million, consisting of the following:



	Amount		Maturity
(in millions)
Revolving Credit Facility ⁽¹⁾⁽²⁾	$	1,150.0	July 16, 2020
U.S. Term A Facility ⁽¹⁾⁽³⁾	1,271.6		July 16, 2020
U.S. Term A-1 Facility ⁽¹⁾⁽³⁾	241.9		July 16, 2021
European Term A Facility ⁽¹⁾⁽³⁾	1,430.1		July 16, 2020
	$	4,093.6


⁽¹⁾	Contractual interest rate varies based on our debt ratio (as defined in the 2015 Credit Agreement) and is a function of LIBOR plus a margin, or the base rate plus a margin.


⁽²⁾	Provides for credit facilities consisting of a $575.0 million U.S. Revolving Credit Facility and a $575.0 million European Revolving Credit Facility. Includes two sub-facilities for letters of credit of up to $200.0 million in the aggregate. We are the borrower under the U.S. Revolving Credit Facility and we and/or CIH are the borrowers under the European Revolving Credit Facility.


⁽³⁾	We are the borrower under the U.S. Term A and the U.S. Term A-1 loan facilities. CIH is the borrower under the European Term A loan facility.

The 2015 Credit Agreement also permits us to elect to increase the revolving credit commitments under the U.S. Revolving Credit Facility or add one or more tranches of additional term loans, subject to the willingness of existing or new lenders to fund such increase or term loans and other customary conditions. The minimum aggregate principal amount of such incremental revolving credit commitment increases or additional term loans may be no less than $25.0 million. The maximum aggregate principal amount of all such incremental revolving credit commitment increases and additional term loans, other than term loans the proceeds of which are applied to repay existing term loans, may be no more than $750.0 million (the “Incremental Cap”), except during a Covenant Suspension Period, during which time the Incremental Cap would be an unlimited amount.

As of August 31, 2015, information with respect to borrowings under the 2015 Credit Agreement is as follows:



	Revolving Credit Facility			U.S. Term A Facility			U.S. Term A-1 Facility			European Term A Facility
(in millions, except percentage data)
Outstanding borrowings	$	—		$	1,271.6		$	241.9		$	1,430.1
Interest rate	—		%	1.7		%	1.9		%	1.7		%
Libor margin	1.5		%	1.5		%	1.75		%	1.5		%
Outstanding letters of credit	$	15.2
Remaining borrowing capacity	$	1,134.8

In addition, in April 2012, we entered into interest rate swap agreements which fixed our interest rates on $500.0 million of our floating LIBOR rate debt at an average rate of 2.8% (exclusive of borrowing margins) through September 1, 2016.

As of August 31, 2015, the required principal repayments of the term loans under the 2015 Credit Agreement for the remaining six months of fiscal 2016 and for each of the five succeeding fiscal years and thereafter are as follows:



	U.S. Term A Facility		U.S. Term A-1 Facility		European Term A Facility		Total
(in millions)
2016	$	31.8	$	1.2	$	35.8	$	68.8
2017	63.6		2.4		71.5		137.5
2018	63.6		2.4		71.5		137.5
2019	63.6		2.4		71.5		137.5
2020	63.5		2.5		71.5		137.5
2021	985.5		2.4		1,108.3		2,096.2
Thereafter	—		228.6		—		228.6
	$	1,271.6	$	241.9	$	1,430.1	$	2,943.6

Accounts receivable securitization facilities –

On September 29, 2014, we entered into an amended 364-day revolving trade accounts receivable securitization facility (the “CBI Facility”). Under the CBI Facility, trade accounts receivable generated by us and certain of our subsidiaries are sold by us to a wholly-owned bankruptcy remote single purpose subsidiary (the “CBI SPV”), which is consolidated by us for financial reporting purposes. The CBI Facility provides borrowing capacity of $190.0 million up to $290.0 million structured to account for the seasonality of our business, subject to further limitations based upon various pre-agreed formulas.

Also, on September 29, 2014, Crown Imports entered into a 364-day revolving trade accounts receivable securitization facility (the “Crown Facility”). Under the Crown Facility, trade accounts receivable generated by Crown Imports are sold by Crown Imports to its wholly-owned bankruptcy remote single purpose subsidiary (the “Crown SPV”), which is consolidated by us for financial reporting purposes. The Crown Facility provides borrowing capacity of $100.0 million up to $160.0 million structured to account for the seasonality of Crown Imports’ business.

As of August 31, 2015, our accounts receivable securitization facilities are as follows:



	Outstanding Borrowings		Weighted Average Interest Rate		Remaining Borrowing Capacity
(in millions)
CBI Facility	$	—	—	%	$	270.0
Crown Facility	$	—	—	%	$	160.0

On September 28, 2015, our existing accounts receivable securitization facilities were amended, resulting in the extension of each facility for an additional 364-day term. In addition, the newly amended CBI Facility provides borrowing capacity of $235.0 million up to $330.0 million and the newly amended Crown Facility provides borrowing capacity of $100.0 million up to $190.0 million. The remaining provisions of the amended facilities are substantially identical in all material respects to the prior facilities.