Business Context and Reporting Period
Company: Molson Coors Brewing Company
Filing Type: Form 8-K (Current Report)
Date of Report: July 7, 2016
Context: The filing reports the completion of concurrent debt offerings and the termination of a bridge loan facility to fund the acquisition of SABMiller plc's interest in MillerCoors and related international assets.
Key Financial Metrics
Debt Issuance (Concurrent Offerings):
- Total Net Proceeds: Approximately $6.9 billion (USD).
- USD Notes: $5.3 billion aggregate principal ($500M 2019, $1.0B 2021, $2.0B 2026, $1.8B 2046).
- EUR Notes: €800 million aggregate principal (approx. $890M USD).
- CAD Notes: C$1.0 billion aggregate principal (approx. $767.8M USD).
Bridge Loan Termination:
- Facility Size: Originally up to $9.3 billion; reduced to $6.8 billion in February 2016.
- Drawdown Status: No amounts were borrowed under the facility.
- Termination Cost: No payments due as a result of termination.
Other Metrics:
- Revenue/Profit/Cash Flow: The filing text does not provide a clear value for operating revenue, net income, or operating cash flow.
- Liquidity: Proceeds to be invested in short-term instruments (U.S. government securities, money market funds) prior to the acquisition closing.
Material Changes Versus Prior Period
Capital Structure Changes:
- Debt Increase: Significant increase in long-term senior unsecured debt obligations totaling approximately $6.9 billion.
- Debt Reduction: Elimination of the $6.8 billion committed 364-Day Bridge Loan facility.
- Interest Obligations: New interest payments commence January 15, 2017 (USD/CAD Notes) and July 15, 2017 (EUR Notes).
Guidance, Outlook, Risks, and Contingencies
Use of Proceeds:
- All net proceeds will be used as partial consideration for the $12 billion acquisition of SABMiller assets from Anheuser-Busch InBev SA/NV.
Redemption and Contingencies:
- Acquisition Failure: If the acquisition is not completed by November 11, 2016 (or extended date), the Company is obligated to redeem all Notes at 101% of principal plus accrued interest.
- Change of Control: Triggers a mandatory offer to purchase Notes at 101% of principal plus accrued interest.
- Call Provisions: Notes are redeemable prior to maturity with a make-whole premium; redeemable at par after specific "Par Call Dates."
Covenants and Risks:
- Covenants: Indentures limit additional secured indebtedness, sale-leaseback transactions, and asset sales/mergers.
- Subordination: Notes are structurally subordinated to debt of non-guarantor subsidiaries and effectively junior to secured obligations.
- Events of Default: Include nonpayment, covenant breaches, cross-defaults, and bankruptcy.
Investor Verification Checklist
- Acquisition Closing Date: Verify if the SABMiller acquisition closes by November 11, 2016, to avoid mandatory redemption at 101%.
- Interest Rate Exposure: Confirm the weighted average cost of the new debt versus the eliminated bridge loan commitment.
- Guarantor Status: Verify the inclusion of MillerCoors LLC as a guarantor within 30 days of the acquisition consummation.
- Currency Risk: Assess the impact of EUR and CAD exchange rate fluctuations on the effective cost of the non-USD notes.
- Covenant Compliance: Review the specific limitations on future secured indebtedness and asset dispositions in the filed Indentures (Exhibits 4.1, 4.9).