Item 1.01.
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Entry into a Material Definitive Agreement.
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On October 13, 2016, Constellation
Brands, Inc. (the Company), CIH International S.à r.l., an indirect wholly owned subsidiary of the Company organized under the laws of Luxembourg (CIH), CIH Holdings S.à r.l., an indirect wholly owned subsidiary
of the Company organized under the laws of Luxembourg (Holdings), CB International Finance S.à r.l., an indirect wholly owned subsidiary of the Company organized under the laws of Luxembourg (CB International and
together with CIH and Holdings, the European Borrowers and the European Borrowers together with the Company, the Borrowers), CI Cerveza S.à r.l., an indirect wholly owned subsidiary of the Company organized under the
laws of Luxembourg, certain of the Companys subsidiaries as guarantors (the Guarantors) of the Borrowers obligations under the Credit Agreement, Bank of America, N.A., as administrative agent (the Administrative
Agent), and certain other lenders (the Lenders) entered into a Restatement Agreement (the Restatement Agreement) that amended and restated the Fourth Amended and Restated Credit Agreement dated as of March 10,
2016, by and among the Company, CIH, Holdings, the Administrative Agent and the other lenders thereto (the Fourth Restated Credit Agreement and as amended and restated by the Restatement Agreement, the Fifth Restated Credit
Agreement).
The principal changes to the Fourth Restated Credit Agreement effected by the Restatement Agreement are (i) the
creation of a new $400,000,000 European Term A-2 loan facility (European Term A-2 Facility) with CIH as the borrower, (ii) the adjustment of the Incremental Facilities Cap (as defined below) from a fixed dollar cap of $750,000,000
to a flexible cap of $750,000,000 plus an unlimited amount so long as the Companys leverage ratio, as defined in the Fifth Restated Credit Agreement, is no greater than 4.50 to 1.00, and (iii) the addition of CB International as a new
borrower under the European Revolving Credit Facility (as defined in the Fifth Restated Credit Agreement). In addition, certain baskets and thresholds contained in exceptions to certain of the negative covenants were increased or modified by the
Restatement Agreement. Also, the European Borrowers entered into an Amended and Restated Cross-Guarantee Agreement.
The European Term A-2 Facility
The European Term A-2 Facility consists of a term loan that will be repaid in quarterly payments of principal equal to 1.25% of the
original aggregate principal amount of the European Term A-2 Facility loan, with the balance payable on March 10, 2021.
The rate of
interest payable on the European Term A-2 Facility loan, at CIHs option, is equal to (i) LIBOR plus a margin, or (ii) the Base Rate plus a margin. The margin for the European Term A-2 Facility loan is adjustable based upon the
Companys leverage ratio, as defined in the Fifth Restated Credit Agreement, and is between 1.25% and 2.25% for LIBOR borrowings and 0.25% and 1.25% for Base Rate borrowings.
The obligations under the European Term A-2 Facility are guaranteed by the Company and certain of the Companys U.S. subsidiaries. These
obligations are also secured by a pledge of (i) 100% of certain interests in certain of the European Borrowers direct and indirect subsidiaries and (ii) 100% of the ownership interests in certain of the Companys U.S.
subsidiaries and 65% of the ownership interests in certain of the Companys foreign subsidiaries, with certain standard exceptions.
Revolving
Credit Facility
CB International was added as a borrower under the European Revolving Credit Facility, and the amount that the
European Borrowers may borrow under this facility remains at $1,000,000,000. The Company may borrow up to the full $1,150,000,000 under the Revolving Credit Facilities (as defined in the Fifth Restated Credit Agreement).
The rate of interest payable on the Revolving Credit Facilities, at the applicable
Borrowers option, is equal to (i) LIBOR plus a margin, or (ii) the Base Rate plus a margin. The margin for the Revolving Credit Facilities is adjustable based upon the Companys leverage ratio, as defined in the Fifth Restated
Credit Agreement, and is between 1.25% and 2.25% for LIBOR borrowings and 0.25% and 1.25% for Base Rate borrowings.
The applicable
European Borrowers obligations under the European Revolving Credit Facility are guaranteed by the Company and certain of the Companys U.S. subsidiaries. These obligations are also secured by a pledge of (i) 100% of certain interests
in certain of the European Borrowers direct and indirect subsidiaries and (ii) 100% of the ownership interests in certain of the Companys U.S. subsidiaries and 65% of the ownership interests in certain of the Companys foreign
subsidiaries, with certain standard exceptions.
As of October 17, 2016, none of the Borrowers had any outstanding revolving credit
loans under the Fifth Restated Credit Agreement.
Incremental Facilities
The Restatement Agreement adjusted the maximum aggregate amount by which the Company may elect, subject to the willingness of existing or new
lenders to fund such increase or term loans and other customary conditions, to increase the Lenders revolving credit commitments or add one or more tranches of additional term loans, other than term loans the proceeds of which are applied to
repay existing term loans (the Incremental Facilities Cap). The Incremental Facilities Cap was adjusted from a fixed dollar cap of $750,000,000 to a flexible cap of $750,000,000 plus an unlimited amount so long as, on a pro forma basis,
the Companys leverage ratio, as defined in the Fifth Restated Credit Agreement, is no greater than 4.50 to 1.00 as of the last day of the most recent fiscal quarter for which financial statements have been delivered pursuant to the Fifth
Restated Credit Agreement.
Amended and Restated Cross-Guarantee Agreement
CIH, Holdings, CB International and the Administrative Agent entered into the Amended and Restated Cross-Guarantee Agreement, dated as of
October 13, 2016 (the A&R Cross-Guarantee), which amends and restates the Cross-Guarantee Agreement, dated as of March 10, 2016, by and among CIH, Holdings and the Administrative Agent. Pursuant to the A&R
Cross-Guarantee, CIH, Holdings and CB International have each unconditionally and irrevocably guaranteed to the Administrative Agent, for the ratable benefit of the Lenders, the obligations of each of the other European Borrowers under the Fifth
Restated Credit Agreement.
Other
Certain of the Lenders, the Administrative Agent and their affiliates have performed, and may in the future perform, various commercial
banking, investment banking, lending, underwriting and brokerage services, and other financial and advisory services for the Company and its subsidiaries for which they have received, and will receive, customary fees and expenses. The Company and
certain of its subsidiaries have, and may in the future, enter into derivative arrangements with certain of the Lenders and their affiliates. In addition, one of the Lenders is the trustee under an indenture for certain of the Companys
outstanding notes. Certain of the Lenders or their affiliates and affiliates of the Administrative Agent are lenders under certain credit facilities to a Sands family investment vehicle that, because of its relationship with members of the Sands
family, is an affiliate of the Company. Such credit facilities are secured by pledges of shares of class A common stock of the Company, class B common stock of the Company, or a combination thereof and personal guarantees of certain members of the
Sands family, including Richard Sands and Robert Sands. In addition, one of the
Companys executive officers is a member of the boards of directors of one of the Lenders and certain of its affiliates.
The foregoing description of the Restatement Agreement and A&R Cross-Guarantee is a summary and is qualified in its entirety by reference
to the Restatement Agreement and A&R Cross-Guarantee, copies of which are filed as Exhibit 4.1 and Exhibit 10.1, respectively, to this Current Report on Form 8-K and incorporated herein by reference.