What is the primary purpose of this $1.5 billion revolving credit agreement?

The primary purpose of this $1.5 billion revolving credit agreement is to provide Mondelez International with financial flexibility for general corporate purposes, including managing working capital and supporting its commercial paper program. This ensures the company has access to funds for its day-to-day operations and short-term financing needs.

When does this credit facility mature, and can it be extended?

The revolving credit agreement has an initial maturity date of February 28, 2018 (364 days). However, Mondelez has the option to extend the maturity of any loans outstanding on that date to February 28, 2019, provided certain conditions are met and prior notice is given.

What are the key financial covenants associated with this agreement?

A significant financial covenant is the requirement for Mondelez to maintain a minimum shareholders' equity of not less than $24.6 billion. This calculation excludes certain items such as accumulated other comprehensive income/loss and effects of accounting changes or mark-to-market adjustments for pension plans.

How are the interest rates determined under this agreement?

Interest rates under the agreement are variable. Borrowings will bear interest at a rate elected by Mondelez, which can be based on either LIBOR or a base rate, plus an applicable margin. This margin is determined by the company's long-term senior unsecured debt rating, meaning better credit ratings could lead to lower interest costs.

MDLZ 8-K: Material Agreements & Financial Events

Summary

Mondelez International, Inc. (MDLZ) filed an 8-K on March 1, 2017, to report the execution of a 364-day senior unsecured revolving credit agreement for $1.5 billion. This facility, which terminates on February 28, 2018, with an option for a one-year extension, is intended for general corporate purposes, including working capital needs and supporting its commercial paper program. The agreement includes a covenant requiring Mondelez to maintain a minimum shareholders' equity of $24.6 billion, with specific exclusions for certain accounting adjustments. This proactive measure provides the company with significant financial flexibility and access to liquidity, which is crucial for ongoing operations and strategic initiatives, especially in supporting its short-term financing needs.

Key Highlights

1Entry into a new $1.5 billion, 364-day revolving credit agreement.
2Facility is senior unsecured and matures on February 28, 2018.
3Option to extend maturity of outstanding loans to February 28, 2019, subject to conditions.
4Interest rates will be variable, based on LIBOR or base rate plus an applicable margin tied to debt ratings.
5Key financial covenant requires minimum shareholders' equity of $24.6 billion.
6Proceeds are designated for general corporate purposes, including working capital and supporting the commercial paper program.
7Several major financial institutions, including J.P. Morgan Chase, Citigroup, Credit Suisse, HSBC, and Merrill Lynch, are involved as arrangers, bookrunners, and lenders.

Mondelez International, Inc. 8-K Report, Material Agreement (Mar 1, 2017)

Summary

Key Highlights

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