Keurig Green Mountain enters into $1.8 billion revolving facilities

By Marisa Wong

Madison, Wis., July 1 – Keurig Green Mountain, Inc. entered into a credit agreement on June 29 for a $1.8 billion unsecured revolving credit facility, according to an 8-K filing with the Securities and Exchange Commission.

Merrill Lynch, Pierce, Fenner & Smith Inc. is joint lead arranger and joint bookrunner; Rabobank Nederland, New York Branch, HSBC Bank USA, NA, HSBC Bank Canada and Wells Fargo Securities, LLC are joint lead arrangers, joint bookrunners and co-syndication agents; Bank of America, NA is administrative agent, U.S. swingline lender and U.S. letter-of-credit issuer; Sumitomo Mitsui Banking Corp. is co-syndication agent; Bank of Tokyo-Mitsubishi UFJ, Ltd., U.S. Bank NA and TD Bank, NA are co-documentation agents; and Branch Banking and Trust Co. and KeyBank NA are co-agents.

The new revolver is comprised of a $1.3 billion U.S. facility and a $500 million alternative currency facility that may be drawn in U.S. dollars, Canadian dollars, euros, pounds sterling, yen, Swiss franc or other currencies.

The facility includes a $200 million subfacility for the issuance of letters of credit and a $50 million sublimit for swingline loans. The swingline borrowings will be made available in U.S. dollars only.

The credit agreement permits the company to request increases to the revolver or establish one or more new term loan commitments, for an aggregate incremental facility of up to $750 million.

The new facility will mature on June 29, 2020.

The applicable margin for eurocurrency rate loans is initially 112.5 basis points. Beginning with the delivery date of financial statements for the fiscal year ending Sept. 26, the applicable margin for the U.S. revolver and the alternative currency revolver will be subject to adjustments based on the company’s consolidated leverage ratio and will range from 112.5 bps to 175 bps.

The company is also required to pay a quarterly commitment fee on the unused portion of the facility ranging from 15 bps to 25 bps, depending on the company’s consolidated leverage ratio.

In addition, the credit agreement contains a financial covenant requiring that the company not exceed a maximum consolidated interest coverage ratio of 3.00 to 1.00. The agreement also contains a financial covenant requiring that the company not exceed a maximum consolidated leverage ratio of 3.25 to 1.00; the maximum consolidated leverage ratio may be increased on a temporary basis to 3.50 to 1.00 in connection with some material acquisitions.

The U.S. revolver was partially drawn in an aggregate amount of $325 million on June 29 to repay the roughly $295 million of borrowings under the company’s former credit agreement.

The prior credit agreement, originally dated June 9, 2011 and scheduled to mature on June 9, 2016, was terminated upon entry into the new credit agreement.

The coffee and coffeemaker company is based in Waterbury, Vt.

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