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

Quarterly report pursuant to Section 13 or 15(d)

Borrowings

Borrowings

3 Months Ended

May 31, 2017

Debt Disclosure [Abstract]

BORROWINGS

BORROWINGS:

Borrowings consist of the following:



	May 31, 2017						February 28, 2017
	Current		Long-term		Total		Total
(in millions)
Notes payable to banks
Senior Credit Facility – Revolving Credit Loans	$	505.0	$	—	$	505.0	$	231.0
Other	483.1		—		483.1		375.5
	$	988.1	$	—	$	988.1	$	606.5

Long-term debt
Senior Credit Facility – Term Loans	$	129.0	$	2,458.1	$	2,587.1	$	3,787.5
Senior Notes	—		5,401.2		5,401.2		4,617.0
Other	17.2		217.9		235.1		227.1
	$	146.2	$	8,077.2	$	8,223.4	$	8,631.6

Senior credit facility –

The Company, CIH International S.à r.l., a wholly-owned indirect subsidiary of ours (“CIH”), CIH Holdings S.à r.l., a wholly-owned indirect subsidiary of ours (“CIHH”), CB International Finance S.à r.l., a wholly-owned indirect subsidiary of ours (“CB International” and together with CIH and CIHH, the “European Borrowers”), Bank of America, N.A., as administrative agent (the “Administrative Agent”), and certain other lenders are parties to a credit agreement, as amended and restated (the “2016 Credit Agreement”).

In May 2017, we repaid the outstanding obligations under the U.S. Term A loan facility under the 2016 Credit Agreement primarily with a portion of the proceeds from the May 2017 Senior Notes (as defined below) and revolver borrowings under the 2016 Credit Agreement. Accordingly, as of May 31, 2017, information with respect to borrowings under the 2016 Credit Agreement is as follows:



	Revolving Credit Facility			U.S. Term A-1 Facility ⁽¹⁾			European Term A Facility ⁽¹⁾			European Term A-1 Facility ⁽¹⁾			European Term A-2 Facility ⁽¹⁾
(in millions)
Outstanding borrowings	$	505.0		$	237.4		$	1,299.4		$	662.4		$	387.9
Interest rate	2.5		%	2.7		%	2.5		%	2.5		%	2.5		%
LIBOR margin	1.5		%	1.75		%	1.5		%	1.5		%	1.5		%
Outstanding letters of credit	$	17.5
Remaining borrowing capacity	$	627.5


⁽¹⁾	Outstanding term loan facility borrowings are net of unamortized debt issuance costs.

As of May 31, 2017, the required principal repayments of the term loans under the 2016 Credit Agreement (excluding unamortized debt issuance costs of $10.6 million) for the remaining nine months of fiscal 2018 and for each of the remaining succeeding fiscal years are as follows:



	U.S. Term A-1 Facility		European Term A Facility		European Term A-1 Facility		European Term A-2 Facility		Total
(in millions)
2018	$	1.8	$	53.7	$	26.2	$	15.0	$	96.7
2019	2.4		71.5		35.0		20.0		128.9
2020	2.4		71.5		35.0		20.0		128.9
2021	2.4		1,108.3		35.0		20.0		1,165.7
2022	228.7		—		533.8		315.0		1,077.5
	$	237.7	$	1,305.0	$	665.0	$	390.0	$	2,597.7

Interest rate swap contracts –

We have entered into interest rate swap agreements, which are designated as cash flow hedges for $250.0 million of our floating LIBOR rate debt. As a result of these hedges, we have fixed our interest rates on $250.0 million of our floating LIBOR rate debt at an average rate of 1.1% (exclusive of borrowing margins) from September 1, 2016, through July 1, 2020.

Senior notes –

In May 2017, we issued $1,500.0 million aggregate principal amount of Senior Notes (the “May 2017 Senior Notes”). Proceeds from this offering, net of discount and debt issuance costs, were $1,483.8 million. The May 2017 Senior Notes consist of:



	Date of
	Maturity	Interest Payments	Principal
(in millions)
2.70% Senior Notes ^{(1) (2)}	May 2022	May/Nov	$	500.0
3.50% Senior Notes ^{(1) (3)}	May 2027	May/Nov	$	500.0
4.50% Senior Notes ^{(1) (4)}	May 2047	May/Nov	$	500.0


⁽¹⁾	Senior unsecured obligations which rank equally in right of payment to all of our existing and future senior unsecured indebtedness. Guaranteed by certain of our U.S. subsidiaries on a senior unsecured basis.

⁽²⁾

Redeemable, in whole or in part, at our option at any time prior to April 9, 2022, at a redemption price equal to 100% of the outstanding principal amount, plus accrued and unpaid interest and a make-whole payment based on the present value of the future payments at the adjusted Treasury Rate plus 15 basis points. On or after April 9, 2022, redeemable, in whole or in part, at our option at any time at a redemption price equal to 100% of the outstanding principal amount, plus accrued and unpaid interest.

⁽³⁾

Redeemable, in whole or in part, at our option at any time prior to February 9, 2027, at a redemption price equal to 100% of the outstanding principal amount, plus accrued and unpaid interest and a make-whole payment based on the present value of the future payments at the adjusted Treasury Rate plus 20 basis points. On or after February 9, 2027, redeemable, in whole or in part, at our option at any time at a redemption price equal to 100% of the outstanding principal amount, plus accrued and unpaid interest.

⁽⁴⁾

Redeemable, in whole or in part, at our option at any time prior to November 9, 2046, at a redemption price equal to 100% of the outstanding principal amount, plus accrued and unpaid interest and a make-whole payment based on the present value of the future payments at the adjusted Treasury Rate plus 25 basis points. On or after November 9, 2046, redeemable, in whole or in part, at our option at any time at a redemption price equal to 100% of the outstanding principal amount, plus accrued and unpaid interest.

In January 2008, we issued $700.0 million aggregate principal amount of 7.25% Senior Notes due May 2017 (the “January 2008 Senior Notes”) in exchange for notes originally issued in May 2007. In May 2017, we repaid the January 2008 Senior Notes with a portion of the proceeds from the May 2017 Senior Notes.

Accounts receivable securitization facilities:

On September 27, 2016, we amended our prior trade accounts receivable securitization facility (as amended, the “CBI Facility”) for an additional 364-day term. 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 $235.0 million up to $340.0 million structured to account for the seasonality of our business, subject to further limitations based upon various pre-agreed formulas.

Also, on September 27, 2016, Crown Imports amended its prior trade accounts receivable securitization facility (as amended, the “Crown Facility”) for an additional 364-day term. 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 $120.0 million up to $210.0 million structured to account for the seasonality of Crown Imports’ business.

As of May 31, 2017, our accounts receivable securitization facilities are as follows:



	Outstanding Borrowings		Weighted Average Interest Rate		Remaining Borrowing Capacity
(in millions)
CBI Facility	$	198.2	1.9	%	$	101.8
Crown Facility	$	206.0	1.9	%	$	4.0