Annual report pursuant to Section 13 and 15(d)

Borrowings

v3.23.1
Borrowings
 12 Months Ended
Feb. 28, 2023
Debt Disclosure [Abstract]  
BORROWINGS BORROWINGS
Borrowings consist of the following:
February 28, 2023 February 28,
2022
Current Long-term Total Total
(in millions)
Short-term borrowings
Commercial paper $ 1,165.3  $ 323.0 
$ 1,165.3  $ 323.0 
Long-term debt
Term loan credit facilities $ —  $ 799.2  $ 799.2  $ 300.0 
Senior notes —  10,470.6  10,470.6  9,773.6 
Other 9.5  16.7  26.2  19.9 
$ 9.5  $ 11,286.5  $ 11,296.0  $ 10,093.5 

Bank facilities
In October 2022, (i) the Company, CB International, the Administrative Agent, and certain other lenders agreed to amend the 2022 Credit Agreement, (ii) the Company, the Administrative Agent, and the Lender agreed to amend the April 2022 Term Credit Agreement, and (iii) the Company, the Administrative Agent, and certain other lenders agreed to amend the August 2022 Term Credit Agreement. The October 2022 Credit Agreement Amendments revise certain defined terms and covenants and will become effective upon (i) the amendment by Canopy of its Articles of Incorporation, (ii) the conversion of our Canopy common shares into Exchangeable Shares, and (iii) the resignation of our nominees from the board of directors of Canopy.

Senior credit facility
In March 2020, the Company, CB International, certain of the Company’s subsidiaries as guarantors, the Administrative Agent, and certain other lenders entered into the 2020 Restatement Agreement that amended and restated our then-existing senior credit facility (as amended and restated by the 2020 Restatement Agreement, the 2020 Credit Agreement). The 2020 Credit Agreement provided for an aggregate revolving credit facility of $2.0 billion. The principal changes effected by the 2020 Restatement Agreement were:

•the removal of the subsidiary guarantees and termination of the guarantee agreement;
•the inclusion of the parent guaranty provisions in connection with the termination of the guarantee agreement;
•the removal of certain provisions pertaining to term loans since no term loans are outstanding; and
•the revision of the LIBOR successor rate provisions to permit the use of rates based on the SOFR.

Upon removal of all subsidiary guarantors from our 2020 Credit Agreement, the subsidiary guarantors were automatically released from the indentures relating to our outstanding senior notes.

In April 2022, the Company, CB International, the Administrative Agent, and certain other lenders entered into the 2022 Restatement Agreement that amended and restated the 2020 Credit Agreement (as amended and restated by the 2022 Restatement Agreement, the 2022 Credit Agreement). The principal changes effected by the 2022 Restatement Agreement were:

•The refinance and increase of the existing revolving credit facility from $2.0 billion to $2.25 billion and extension of its maturity to April 14, 2027;
•The refinement of certain negative covenants; and
•The replacement of LIBOR rates with rates based on term SOFR.
2020 Term Credit Agreement
In March 2020, the Company, certain of the Company’s subsidiaries as guarantors, the Administrative Agent, and certain other lenders entered into the Term Loan Restatement Agreement that amended and restated our then-existing term credit agreement (as amended and restated by the Term Loan Restatement Agreement, the 2020 Term Credit Agreement). The 2020 Term Credit Agreement provided for aggregate credit facilities of $1.5 billion, consisting of a $500.0 million three-year term loan facility and a $1.0 billion five-year term loan facility. During Fiscal 2021, we repaid the outstanding term loan facility borrowings under our 2020 Term Credit Agreement.

April 2022 Term Credit Agreement
In March 2020, the Company, certain of the Company’s subsidiaries as guarantors, and the Lender entered into the 2020 Term Loan Restatement Agreement that amended and restated our then-existing term credit agreement (as amended and restated by the 2020 Term Loan Restatement Agreement, the March 2020 Term Credit Agreement). The principal changes effected by the 2020 Term Loan Restatement Agreement were:

•the removal of the subsidiary guarantees and termination of the respective guarantee agreements; and
•the revision of the LIBOR successor rate provisions to permit the use of rates based on SOFR.

In June 2021, the Company and the Administrative Agent and Lender amended the March 2020 Term Credit Agreement. The principal change effected by the amendment was a reduction in LIBOR margin from 0.88% to 0.63% from June 1, 2021 through December 31, 2021.

In April 2022, the Company, the Administrative Agent, and the Lender amended the June 2021 Term Credit Agreement (as amended, the April 2022 Term Credit Agreement). The principal changes effected by the amendment were the refinement of certain negative covenants and replacement of LIBOR rates with rates based on term SOFR.

August 2022 Term Credit Agreement
In August 2022, the Company, the Administrative Agent, and certain other lenders entered into the August 2022 Term Credit Agreement. The August 2022 Term Credit Agreement provides for a $1.0 billion three-year term loan facility and is not subject to amortization payments, with the balance due and payable three years after the November 10, 2022, funding date. We have the right to prepay the borrowing in whole or in part, without premium or penalty, ahead of its three-year maturity date (as defined in the August 2022 Term Credit Agreement). The proceeds from the August 2022 Term Credit Agreement were used to partially fund the aggregate cash payment to holders of Class B Stock in connection with the Reclassification and to pay related fees as well as fees related to closing the August 2022 Term Credit Agreement. In February 2023, we repaid a portion of our indebtedness under the August 2022 Term Credit Agreement with proceeds from the February 2023 Senior Notes.

General
We and our subsidiaries are subject to covenants that are contained in the 2022 Credit Agreement, the April 2022 Term Credit Agreement, and the August 2022 Term Credit Agreement, including those restricting the incurrence of additional subsidiary 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.

Our senior credit facility permits us to elect, subject to the willingness of existing or new lenders to fund such increase and other customary conditions, to increase the revolving credit commitments. The increased commitments may be an unlimited amount so long as our net leverage ratio, as defined and computed pursuant to our senior credit facility, is no greater than 4.00 to 1.00 subject to certain limitations for the period defined pursuant to our senior credit facility.
As of February 28, 2023, aggregate credit facilities under the 2022 Credit Agreement, the April 2022 Term Credit Agreement, and the August 2022 Term Credit Agreement consist of the following:
Initial
borrowing
capacity		 Maturity
(in millions)
2022 Credit Agreement
Revolving credit facility (1) (2)
$ 2,250.0  Apr 14, 2027
April 2022 Term Credit Agreement
Five-Year Term Facility (1) (3)
$ 491.3  Jun 28, 2024
August 2022 Term Credit Agreement
Three-year term facility (1) (3)
$ 1,000.0 
Nov 10, 2025
(1)Contractual interest rate varies based on our debt rating (as defined in the respective agreement) and is a function of SOFR plus a margin and a credit spread adjustment, or the base rate plus a margin, or, in certain circumstances where SOFR cannot be adequately ascertained or available, an alternative benchmark rate plus a margin.
(2)We and/or CB International are the borrower under the $2,250.0 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 term loan credit agreements.

As of February 28, 2023, information with respect to borrowings under the 2022 Credit Agreement, the April 2022 Term Credit Agreement, and the August 2022 Term Credit Agreement is as follows:
Outstanding
borrowings		 Interest
rate		 SOFR
margin		 Outstanding
letters of
credit
Remaining
borrowing
capacity (1)
(in millions)
2022 Credit Agreement
Revolving credit facility $ —  —  % —  % $ 12.0  $ 1,068.5 
April 2022 Term Credit Agreement
Five-Year Term Facility (2)
$ 300.0  5.5  % 0.88  %
August 2022 Term Credit Agreement
Three-year term facility (3)
$ 500.0  5.8  % 1.13  %
(1)Net of outstanding revolving credit facility borrowings and outstanding letters of credit under the 2022 Credit Agreement and outstanding borrowings under our commercial paper program of $1,169.5 million (excluding unamortized discount) (see “Commercial paper program” below).
(2)Outstanding term loan facility borrowings reflect a partial repayment of $142.1 million made in June 2021.
(3)Outstanding term loan facility borrowings are net of unamortized debt issuance costs and unamortized discount and reflect a partial repayment of $500.0 million made in February 2023.

Commercial paper program
We have a commercial paper program which provides for the issuance of up to an aggregate principal amount of $2.25 billion of commercial paper, inclusive of a $250.0 million increase implemented in December 2022. Our commercial paper program is backed by unused commitments under our revolving credit facility under our 2022 Credit Agreement. Accordingly, outstanding borrowings under our commercial paper program reduce
the amount available under our revolving credit facility. Information with respect to our outstanding commercial paper borrowings is as follows:
February 28,
2023		 February 28,
2022
(in millions)
Outstanding borrowings (1)
$ 1,165.3  $ 323.0 
Weighted average annual interest rate 5.3  % 0.5  %
Weighted average remaining term 25 days 4 days
(1)Outstanding commercial paper borrowings are net of unamortized discount.

Pre-issuance hedge contracts
In February 2022, we entered into a Pre-issuance hedge contract, which was designated as a cash flow hedge. As of February 28, 2022, we had hedged the treasury rate volatility on $100.0 million of future debt issuances. In April and May 2022, we entered into additional cash flow designated Pre-issuance hedge contracts. As a result of these agreements, we hedged the treasury rate volatility on an additional $200.0 million of future debt issuances. In May 2022, we terminated and settled all outstanding Pre-issuance hedge contracts, and recognized an unrealized gain, net of income tax effect, of $15.3 million in AOCI within our consolidated balance sheets. The gain on Pre-issuance hedge contracts is being amortized over 10 years, the life of the 4.75% Senior Notes issued in May 2022, to interest expense within our consolidated results of operations.

Senior notes
Our outstanding senior notes are as follows:
Date of
Outstanding Balance (1)
Principal Issuance Maturity Interest
Payments		 February 28,
2023		 February 28,
2022
(in millions)
4.25% Senior Notes (2) (3) (4)
$ 1,050.0  May 2013 May 2023 May/Nov —  1,048.6 
4.75% Senior Notes (2) (3)
$ 400.0  Nov 2014 Nov 2024 May/Nov 398.9  398.2 
4.75% Senior Notes (2) (3)
$ 400.0  Dec 2015 Dec 2025 Jun/Dec 398.2  397.5 
3.70% Senior Notes (2) (5)
$ 600.0  Dec 2016 Dec 2026 Jun/Dec 597.7  597.1 
3.50% Senior Notes (2) (5)
$ 500.0  May 2017 May 2027 May/Nov 497.7  497.2 
4.50% Senior Notes (2) (5)
$ 500.0  May 2017 May 2047 May/Nov 493.6  493.4 
3.20% Senior Notes (2) (5) (6)
$ 600.0  Feb 2018 Feb 2023 Feb/Aug —  599.0 
3.60% Senior Notes (2) (5)
$ 700.0  Feb 2018 Feb 2028 Feb/Aug 696.4  695.7 
4.10% Senior Notes (2) (5)
$ 600.0  Feb 2018 Feb 2048 Feb/Aug 592.9  592.6 
4.40% Senior Notes (2) (5)
$ 500.0  Oct 2018 Nov 2025 May/Nov 498.0  497.3 
4.65% Senior Notes (2) (5)
$ 500.0  Oct 2018 Nov 2028 May/Nov 496.8  496.2 
5.25% Senior Notes (2) (5)
$ 500.0  Oct 2018 Nov 2048 May/Nov 493.6  493.3 
3.15% Senior Notes (2) (5)
$ 800.0  Jul 2019 Aug 2029 Feb/Aug 795.4  794.7 
2.875% Senior Notes (2) (5)
$ 600.0  Apr 2020 May 2030 May/Nov 595.5  594.9 
3.75% Senior Notes (2) (5)
$ 600.0  Apr 2020 May 2050 May/Nov 590.3  589.9 
2.25% Senior Notes (2) (5)
$ 1,000.0  Jul 2021 Aug 2031 Feb/Aug 989.2  988.0 
3.60% Senior Notes (2) (7)
$ 550.0  May 2022 May 2024 May/Nov 548.5  — 
4.35% Senior Notes (2) (5)
$ 600.0  May 2022 May 2027 May/Nov 597.1  — 
4.75% Senior Notes (2) (5)
$ 700.0  May 2022 May 2032 May/Nov 693.7  — 
5.00% Senior Notes (2) (8)
$ 500.0  Feb 2023 Feb 2026 Feb/Aug 497.1  — 
$ 10,470.6  $ 9,773.6 
(1)Amounts are net of unamortized debt issuance costs and unamortized discounts, where applicable.
(2)Senior unsecured obligations which rank equally in right of payment to all of our existing and future senior unsecured indebtedness.
(3)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 and a make-whole payment based on the present value of the future payments at the applicable treasury rate plus 50 basis points.
(4)In May 2022, we completed a series of cash tender offers. Cash consideration paid for these purchases was $690.6 million and the carrying amount of the notes was $679.4 million, resulting in a loss on extinguishment of debt of $11.2 million (including an immaterial amount of fees and other costs associated with the tender offers), which is included within our consolidated results. In June 2022, we redeemed the remaining outstanding principal balances prior to maturity, plus accrued and unpaid interest and a make-whole payment of $5.7 million. The make-whole payment is included in loss on extinguishment of debt within our consolidated results of operations.
(5)Redeemable, in whole or in part, at our option at any time prior to the stated redemption date as defined in the indenture, 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 the stated basis points as defined in the indenture. On or after the stated redemption date, 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.
Redemption
Stated
Redemption
Date		 Stated
Basis
Points
3.70% Senior Notes due December 2026 Sept 2026 25
3.50% Senior Notes due May 2027 Feb 2027 20
4.50% Senior Notes due May 2047 Nov 2046 25
3.20% Senior Notes due February 2023 Jan 2023 13
3.60% Senior Notes due February 2028 Nov 2027 15
4.10% Senior Notes due February 2048 Aug 2047 20
4.40% Senior Notes due November 2025 Sept 2025 20
4.65% Senior Notes due November 2028 Aug 2028 25
5.25% Senior Notes due November 2048 May 2048 30
3.15% Senior Notes due August 2029 May 2029 20
2.875% Senior Notes due May 2030 Feb 2030 35
3.75% Senior Notes due May 2050 Nov 2049 40
2.25% Senior Notes due August 2031 May 2031 15
4.35% Senior Notes due May 2027 Apr 2027 25
4.75% Senior Notes due May 2032 Feb 2032 30
(6)In May 2022, we completed a series of cash tender offers. Cash consideration paid for these purchases was $405.3 million and the carrying amount of the notes was $401.2 million, resulting in a loss on extinguishment of debt of $4.1 million (including an immaterial amount of fees and other costs associated with the tender offers), which is included within our consolidated results. In June 2022, we redeemed the remaining outstanding principal balance prior to maturity, plus accrued and unpaid interest and a make-whole payment of $1.8 million. The make-whole payment is included in loss on extinguishment of debt within our consolidated results of operations.
(7)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 and a make-whole payment based on the present value of the future payments at the applicable treasury rate plus 15 basis points.
(8)Redeemable, in whole or in part, at our option at any time prior to February 2, 2024, (two years before the maturity date as defined in the indenture), 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 February 2, 2024, 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.

Indentures
Our indentures relating to our outstanding senior notes contain certain covenants, including, but not limited to: (i) a limitation on liens on certain assets, (ii) a limitation on certain sale and leaseback transactions, and (iii) restrictions on mergers, consolidations, and the transfer of all or substantially all of our assets to another person.

Subsidiary credit facilities
General
We have additional credit arrangements totaling $73.5 million and $64.5 million as of February 28, 2023, and February 28, 2022, respectively. As of February 28, 2023, and February 28, 2022, amounts outstanding under these arrangements were $26.2 million and $19.9 million, respectively, the majority of which is classified as long-term as of the respective date. These arrangements primarily support the financing needs of our domestic and foreign subsidiary operations. Interest rates and other terms of these borrowings vary from country to country, depending on local market conditions.

Debt payments
As of February 28, 2023, the required principal repayments under long-term debt obligations (excluding unamortized debt issuance costs and unamortized discounts of $59.0 million and $21.2 million, respectively) for each of the five succeeding fiscal years and thereafter are as follows:
(in millions)
Fiscal 2024 $ 10.4 
Fiscal 2025 1,256.3 
Fiscal 2026 1,904.5 
Fiscal 2027 603.5 
Fiscal 2028 1,801.4 
Thereafter 5,800.1 
$ 11,376.2