8-KMaterial AgreementsFinancial EventsExhibits & Filings

Mondelez International, Inc. 8-K Report, Material Agreement (Feb 22, 2023)

Filed February 22, 2023For Securities:MDLZ

Summary

Mondelēz International, Inc. (MDLZ) has filed an 8-K report detailing the execution of a new $1.5 billion 364-day senior unsecured revolving credit agreement on February 22, 2023. This facility replaces a previous $2.5 billion agreement that was terminated in conjunction with the new agreement. The new credit facility has a termination date of February 21, 2024, but offers the option to extend outstanding loans for an additional year to February 21, 2025, subject to certain conditions. The company also has the flexibility to increase the facility by up to $500 million with lender agreement. This new credit agreement is primarily intended for general corporate purposes, including working capital needs and supporting the company's commercial paper program. Investors should note the covenant requiring a minimum shareholders' equity of $25.0 billion, with specific exclusions for certain accounting adjustments. The interest rate on borrowings will be variable, based on SOFR or a base rate, plus an applicable margin tied to the company's long-term senior unsecured debt rating.

Key Highlights

  • 1Entry into a new $1.5 billion 364-day senior unsecured revolving credit agreement, effective February 22, 2023.
  • 2Termination of the prior $2.5 billion 364-day revolving credit agreement dated February 23, 2022.
  • 3The new facility has a termination date of February 21, 2024, with an option to extend loans to February 21, 2025.
  • 4Potential for an increase of up to $500 million in the credit facility size.
  • 5Funds are designated for general corporate purposes, including working capital and supporting the commercial paper program.
  • 6Key financial covenant requires a minimum shareholders' equity of $25.0 billion, with specific exclusions.
  • 7Interest rates will be variable, tied to SOFR or base rate plus an applicable margin based on debt rating.

Frequently Asked Questions

Mondelez is entering into a new $1.5 billion 364-day revolving credit facility that provides flexibility, including the potential to increase the facility size and extend the maturity of outstanding loans. The termination of the previous $2.5 billion agreement is a standard procedural step associated with entering into new credit arrangements, potentially to optimize the company's financing structure and terms.

The new $1.5 billion credit facility is intended for general corporate purposes. This includes supporting the company's working capital needs, which are essential for day-to-day operations, and providing liquidity to back its commercial paper program, a form of short-term debt.

A significant covenant is the requirement to maintain a minimum shareholders' equity of $25.0 billion. It's important to note that certain components of equity, such as accumulated other comprehensive income/loss and mark-to-market adjustments for pension plans, are excluded from this calculation.

Interest rates will be variable, meaning they can fluctuate. Borrowings will bear interest at either the Secured Overnight Financing Rate (SOFR) or a base rate, at Mondelez's election, plus an applicable margin. This margin will be determined by the company's long-term senior unsecured debt rating, implying that a better credit rating could lead to lower borrowing costs.