WK Kellogg enters $1.1 billion three-part five-year credit facility

By Wendy Van Sickle

Columbus, Ohio, Sept. 12 – Kellogg Co. subsidiary WK Kellogg Co. entered on Tuesday into a $1.1 billion five-year credit facility in three parts, according to an 8-K filed with the Securities and Exchange Commission.

The credit facility comprises a $500 million term loan and a $250 million delayed-draw term loan with a 15-month draw period, both available in U.S. dollars, and a $350 million multi-currency revolver.

Borrowings bear interest at SOFR, or the benchmark applicable to the currency, plus a margin ranging from 150 basis points to 250 bps, depending on the consolidated net leverage ratio. Unused commitments will accrue a fee ranging from 20 bps to 30 bps, also based on the consolidated net leverage ratio.

WK Kellogg will have the right to request incremental term loans or an increase to the revolver in a total principal amount up to the greater of $250 million or 100% of its consolidated EBITDA for the preceding four fiscal quarters.

The credit facility will amortize in equal quarterly installments in an aggregate annual amount equal to 2.5% in year one, 5% in years two and three, 7.5% in year four and 10% in year five, of the original principal amount, with the balance due at maturity.

Financial covenants include a consolidated net leverage ratio, an interest coverage ratio and a capital expenditure covenant.

Rabobank is the administrative agent and a joint bookrunner with Cobank ACB. The two are joined as lead arrangers by Greenstone Farm Credit Services, FLCA, Bank of America, NA, Citibank, NA, JPMorgan Chase Bank, NA and Mizuho Bank, Ltd.

ING Capital LLC and Bank of Nova Scotia are co-documentation agents.

Kellogg Co.’s board of directors approved the company’s separation into two independent, publicly traded companies, WK Kellogg Co. and Kellanova. WK Kellogg will build on the company’s foundation of brands and leading share position in North American cereal, and Kellanova will be weighted toward snacks and emerging markets.

Proceeds of the initial term loans and the revolver may be used to fund a cash dividend to be paid by WK Kellogg to Kellogg on the initial funding date, to pay transaction costs and for working capital and general corporate purposes. The delayed-draw loan may be used for working capital and general corporate purposes.

The Battle Creek, Mich.-based company manufactures cereal and convenience foods.

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