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

Quarterly report pursuant to Section 13 or 15(d)

Borrowings

Borrowings

9 Months Ended

Nov. 30, 2019

Borrowings consist of the following:



	November 30, 2019						February 28, 2019
	Current		Long-term		Total		Total
(in millions)
Short-term borrowings
Senior credit facility, Revolving credit loan	$	—					$	59.0
Commercial paper	281.5						732.5
	$	281.5					$	791.5

Long-term debt
Senior credit facility, Term loan	$	—	$	—	$	—	$	492.8
Term loan credit facilities	24.6		1,402.2		1,426.8		1,486.4
Senior notes	698.2		9,923.2		10,621.4		10,816.9
Other	12.0		14.3		26.3		28.9
	$	734.8	$	11,339.7	$	12,074.5	$	12,825.0

Senior credit facility

The Company, CB International Finance S.à r.l., a wholly-owned subsidiary of ours (“CB International”), certain of the Company’s subsidiaries as guarantors, 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 “2018 Credit Agreement”). The 2018 Credit Agreement provides for an aggregate revolving credit facility of $2.0 billion.

Term Credit Agreement

The Company, the Administrative Agent, and certain other lenders are parties to a term loan credit agreement (the “Term Credit Agreement”). The Term Credit Agreement provides for aggregate credit facilities of $1.5 billion, consisting of a $500.0 million three-year term loan facility (the “Three-Year Term Facility”) and a $1.0 billion five-year term loan facility (the “Five-Year Term Facility”).

2019 Term Credit Agreement

In June 2019, the Company and Bank of America, N.A., as Administrative Agent and lender (the “Lender”) entered into a term loan credit agreement (the “2019 Term Credit Agreement”). The 2019 Term Credit Agreement provides for the creation of a $491.3 million five-year term loan facility (the “2019 Five-Year Term Facility”). The 2019 Five-Year Term Facility will be repaid in quarterly payments of principal equal to 1.25% of the original aggregate principal amount of the 2019 Five-Year Term Facility, with the balance due and payable at maturity. The proceeds from borrowings under the 2019 Term Credit Agreement were used to repay in full the U.S. Term A-1 Facility under the 2018 Credit Agreement.

The obligations under the 2019 Term Credit Agreement are guaranteed by certain subsidiaries of the Company. The guarantors under the 2019 Term Credit Agreement are the same subsidiary guarantors as under the 2018 Credit Agreement and the Term Credit Agreement. We and our subsidiaries are subject to covenants that are contained in the 2019 Term Credit Agreement, including those restricting the incurrence of additional indebtedness (including guarantees of indebtedness), additional liens, mergers and consolidations, transactions with affiliates, and sale and leaseback transactions, in each case subject to numerous conditions, exceptions and thresholds. The financial covenants are limited to a minimum interest coverage ratio and a maximum net leverage ratio.

As of November 30, 2019, aggregate credit facilities under the 2018 Credit Agreement, the Term Credit Agreement, and the 2019 Term Credit Agreement consist of the following:



	Amount		Maturity
(in millions)
2018 Credit Agreement
Revolving Credit Facility ^{(1) (2)}	$	2,000.0	Sept 14, 2023

Term Credit Agreement
Three-Year Term Facility ^{(1) (3)}	$	500.0	Nov 1, 2021
Five-Year Term Facility ^{(1) (3)}	1,000.0		Nov 1, 2023
	$	1,500.0
2019 Term Credit Agreement
2019 Five-Year Term Facility ^{(1) (3)}	$	491.3	Jun 28, 2024


⁽¹⁾	Contractual interest rate varies based on our debt rating (as defined in the respective agreement) and is a function of LIBOR plus a margin, or the base rate plus a margin, or, in certain circumstances where LIBOR cannot be adequately ascertained or available, an alternative benchmark rate plus a margin.


⁽²⁾	We and/or CB International are the borrower under the $2,000.0 million Revolving Credit Facility. Includes a sub-facility for letters of credit of up to $200.0 million.


⁽³⁾	We are the borrower under the Three-Year Term Facility, the Five-Year Term Facility, and the 2019 Five-Year Term Facility.

As of November 30, 2019, information with respect to borrowings under the 2018 Credit Agreement, the Term Credit Agreement, and the 2019 Term Credit Agreement is as follows:



	2018 Credit Agreement			Term Credit Agreement						2019 Term Credit Agreement
	Revolving Credit Facility			Three-Year Term Facility ⁽¹⁾			Five-Year Term Facility ^{(1) (2)}			2019 Five-Year Term Facility ⁽¹⁾
(in millions)
Outstanding borrowings	$	—		$	499.6		$	442.1		$	485.1
Interest rate	—		%	2.9		%	3.0		%	2.7		%
LIBOR margin	1.13		%	1.13		%	1.25		%	0.88		%
Outstanding letters of credit	$	11.8
Remaining borrowing capacity ⁽³⁾	$	1,706.2


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


⁽²⁾	Outstanding borrowings reflect a $520.0 million partial repayment of the Five-Year Term Facility under our Term Credit Agreement.


⁽³⁾	Net of outstanding revolving credit facility borrowings and outstanding letters of credit under the 2018 Credit Agreement and outstanding borrowings under our commercial paper program of $282.0 million (excluding unamortized discount) (see “Commercial paper program”).

Commercial paper program

We have a commercial paper program which provides for the issuance of up to an aggregate principal amount of $2.0 billion of commercial paper. Our commercial paper program is backed by unused commitments under our revolving credit facility under our 2018 Credit Agreement. Accordingly, outstanding borrowings under our commercial paper program reduce the amount available under our revolving credit facility under our 2018 Credit Agreement. As of November 30, 2019, we had $281.5 million of outstanding borrowings, net of unamortized discount, under our commercial paper program with a weighted average annual interest rate of 2.0% and a weighted average remaining term of 34 days.

Interest rate swap contracts

In June 2019, we entered into interest rate swap agreements, which are designated as cash flow hedges for $375.0 million of our floating LIBOR rate debt. As a result of these hedges, we have fixed our interest rates on $375.0 million of our floating LIBOR rate debt at an average rate of 1.9% (exclusive of borrowing margins) from July 1, 2019, through July 1, 2020.

Senior Notes

In July 2019, we issued $800.0 million aggregate principal amount of 3.15% Senior Notes due August 2029 (the “July 2019 Senior Notes”). Proceeds from this offering, net of discount and debt issuance costs, were $793.0 million. Interest on the July 2019 Senior Notes is payable semiannually on February 1 and August 1 of each year, beginning February 1, 2020. The July 2019 Senior Notes are redeemable, in whole or in part, at our option at any time prior to May 1, 2029, 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 applicable Treasury Rate plus 20 basis points. On or after May 1, 2029, we may redeem the July 2019 Senior Notes, 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. The July 2019 Senior Notes are senior unsecured obligations which rank equally in right of payment to all of our existing and future senior unsecured indebtedness. Certain of our U.S. subsidiaries guarantee the July 2019 Senior Notes on a senior unsecured basis.

In November 2014, we issued $400.0 million aggregate principal amount of 3.875% Senior Notes due November 2019 (the “3.875% November 2014 Senior Notes”). On August 28, 2019, we repaid the 3.875% November 2014 Senior Notes with proceeds from the July 2019 Senior Notes.

In November 2017, we issued $600.0 million aggregate principal amount of 2.00% Senior Notes due November 2019 (the “2.00% November 2017 Senior Notes”). On November 7, 2019, we repaid the 2.00% November 2017 Senior Notes with proceeds from the Black Velvet Divestiture, commercial paper borrowings, and cash on hand.

Debt payments

As of November 30, 2019, the required principal repayments under long-term debt obligations (excluding unamortized debt issuance costs and unamortized discounts of $65.3 million and $14.1 million, respectively) for the remaining three months of fiscal 2020 and for each of the five succeeding fiscal years and thereafter are as follows:



(in millions)
2020	$	9.3
2021	735.7
2022	1,681.7
2023	1,828.3
2024	1,518.2
2025	780.7
Thereafter	5,600.0
	$	12,153.9