Summary
Kraft Foods Inc. (now Mondelez International) filed an 8-K on May 31, 2012, to announce the pricing of $6 billion in aggregate principal amount of notes. These notes are being issued by its wholly owned subsidiary, Kraft Foods Group, Inc., and will be guaranteed by Kraft Foods Inc. initially. The issuance consists of various tranches with different maturity dates and interest rates, ranging from 1.625% for notes due 2015 to 5.000% for notes due 2042. The primary purpose of this debt issuance appears to be in anticipation of the previously announced spin-off of Kraft Foods Inc.'s North American grocery business into Kraft Foods Group. Importantly, Kraft Foods Inc.'s guarantee of these notes will automatically terminate upon the consummation of the spin-off, releasing the parent company from those obligations. This move suggests a strategic financial maneuver to facilitate the separation and potentially fund ongoing operations or transition costs related to the spin-off.
Key Highlights
- 1Kraft Foods Inc. (precursor to Mondelez) priced $6 billion in aggregate principal amount of notes.
- 2The notes are issued by its wholly owned subsidiary, Kraft Foods Group, Inc.
- 3The issuance includes multiple tranches: $1B (1.625% due 2015), $1B (2.250% due 2017), $2B (3.500% due 2022), and $2B (5.000% due 2042).
- 4Kraft Foods Inc. initially guaranteed the notes, but this guarantee will terminate upon the spin-off of the North American grocery business.
- 5The notes are senior unsecured obligations of Kraft Foods Group.
- 6The issuance is linked to the previously announced spin-off of the North American grocery business.
- 7The debt issuance is expected to close on June 4, 2012.