Constellation ups revolver, gets new term loan, 364-day bridge loan

By Sarah Lizee

Olympia, Wash., Sept. 19 – Constellation Brands, Inc. increased and extended its existing revolving credit facility and entered into a new $1.5 billion term loan credit agreement and a new C$3,142,950,000 bridge credit agreement on Friday, according to an 8-K filing with the Securities and Exchange Commission.

The revolver was increased to $2 billion from $1.5 billion and extended to Sept. 14, 2028.

The company said it also amended some financial covenants in connection with its proposed acquisition of additional common shares, plus warrants to purchase the shares, of Canopy Growth Corp.

The consolidated net leverage ratio was adjusted so that after the Canopy investment is complete, the company’s ratio may not exceed some maximum levels, starting at 5.25 to 1 beginning with the fiscal quarter ending Nov. 30, and adjusted to 4 to 1 beginning with the fiscal quarter ending Aug. 31, 2021, subject to an increase to 4.5 to 1 in quarters following a material acquisition.

The revolver bears interest at Libor plus 87.5 basis points to 150 bps and the commitment fee ranges from 7 bps to 20 bps, depending on ratings.

As of Friday, there was $57.5 million of outstanding revolving credit loans under the facility.

For both the revolver and the new term loan agreement, Merrill Lynch, Pierce, Fenner & Smith Inc., Banco Bilbao Vizcaya Argentaria, SA New York Branch, Bank of Montreal, Goldman Sachs Bank USA, JPMorgan Chase Bank, NA, Manufacturers and Traders Trust Co., MUFG Bank, Ltd., PNC Bank, NA, SunTrust Robinson Humphrey, Inc., Bank of Nova Scotia, Toronto-Dominion Bank, Wells Fargo Bank, NA, BNP Paribas and Bank of the West are joint lead arrangers and joint bookrunners.

Bank of America, NA is the administrative agent.

Banco Bilbao, BMO, Goldman Sachs, JPMorgan, Manufacturers and Traders, MUFG, PNC, SunTrust, Scotiabank, TD Bank, Wells Fargo, BNP and Bank of the West are co-syndication agents.

Branch Banking and Trust Co. and Fifth Third Bank are co-documentation agents.

Term credit agreement

The company entered into a term credit agreement that consists of a $500 million three-year term loan facility and a $1 billion five-year term loan facility.

The three-year term facility is not subject to amortization payments, with the balance due and payable on the third anniversary of the closing date. The five-year term facility will be repaid in quarterly payments of principal equal to 1.25% of the original total principal amount, with the unpaid balance due and payable on the fifth anniversary of the closing date.

The three-year term loan bears interest at Libor plus 87.5 bps to 150 bps, and the five-year term loan bears interest at Libor plus 100 bps to 162.5 bps, both based on ratings.

The financial covenants are limited to a minimum interest coverage ratio and a maximum net debt coverage ratio.

Proceeds will be used to finance a portion of the Canopy investment.

Bridge credit agreement

The company entered into bridge credit agreement with Bank of America as administrative agent that provides for a C$3,142,950,000 364-day senior unsecured term loan facility.

Interest is Libor plus a margin that is based on ratings. The margin will range from 87.5 bps to 150 bps from days one through 89, 112.5 bps to 175 bps from days 90 through 179, 137.5 bps to 200 bps from days 180 through 269 and 162.5 bps to 225 bps after that.

Proceeds will be used to finance a portion of the Canopy investment.

Merrill Lynch is the lead arranger and bookrunner, JPMorgan is the syndication agent, and Goldman Sachs is the documentation agent.

Constellation Brands is a Victor, N.Y.-based producer, importer and distributor of beer, wine and liquor.

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