Business Context and Reporting Period
Constellation Brands, Inc. filed a Form 8-K Current Report on December 6, 2016. The filing reports the execution of Supplemental Indenture No. 11 to amend the company's existing debt indenture dated April 17, 2012.
Key Financial Metrics and Debt Structure
The company issued $600,000,000 aggregate principal amount of 3.700% Senior Notes due 2026. Interest accrues from December 6, 2016, with semiannual payments beginning June 6, 2017. The Notes mature on December 6, 2026.
- Debt Instrument: 3.700% Senior Notes due 2026.
- Principal Amount: $600,000,000.
- Ranking: Equal to existing unsecured senior indebtedness; senior to subordinated debt; effectively subordinated to secured indebtedness (including the Credit Facility).
- Guarantees: Guaranteed by certain existing and future subsidiaries on a senior unsecured basis.
Material Changes and Redemption Terms
The filing establishes new debt obligations and redemption rights:
- Pre-September 6, 2026: The Company may redeem Notes in whole or in part at 100% of principal plus accrued interest and a make-whole premium.
- Post-September 6, 2026: The Company may redeem Notes at 100% of principal plus accrued interest.
- Change of Control: If a Change of Control Triggering Event occurs, the Company must offer to repurchase the Notes at 101% of principal plus accrued interest.
Management Commentary, Risks, and Covenants
The Indenture includes covenants limiting the Company's ability to create liens, enter into sale-leaseback transactions, and engage in mergers, consolidations, or asset sales under certain circumstances. The Notes are structurally subordinated to all indebtedness of subsidiaries that do not guarantee the Notes. Holders have no direct claim on assets of non-guarantor subsidiaries.
Investor Verification Checklist
- Verify the full text of Supplemental Indenture No. 11 (Exhibit 4.1) for specific covenant definitions and limitations.
- Confirm the status of the Fifth Amended and Restated Credit Agreement to understand the extent of secured indebtedness senior to these Notes.
- Review the list of subsidiary guarantors to assess the structural subordination risk.
- Check the Registration Statement on Form S-3 (File No. 333-199293) for additional terms incorporated by reference.