8-KMaterial AgreementsFinancial EventsExhibits & Filings

ALTRIA GROUP, INC. 8-K Report, Material Agreement (Dec 7, 2007)

Filed December 7, 2007For Securities:MO

Summary

On December 4, 2007, Altria Group, Inc.'s wholly-owned subsidiary, Philip Morris International Inc. (PMI), entered into a significant credit agreement. This agreement establishes three new senior unsecured credit facilities: a US$3.0 billion 5-year revolving credit facility, a US$1.0 billion 3-year revolving credit facility, and a EUR 1.5 billion 364-day term loan facility. Notably, Altria itself has no obligations or guarantees under these facilities, with PMI and its subsidiaries being the primary obligors. The primary purpose of these new credit lines is for general corporate needs. The revolving facilities are designated for corporate purposes, including acting as a backstop for commercial paper issuance. The term facility is specifically earmarked for refinancing existing debt, notably repaying a prior term loan facility from May 2005. This move indicates PMI's proactive management of its debt structure and liquidity in anticipation of future needs.

Key Highlights

  • 1Philip Morris International Inc. (PMI), a subsidiary of Altria, secured new credit facilities totaling approximately US$4.0 billion and EUR 1.5 billion.
  • 2The credit facilities include a 5-year revolving credit facility (US$3.0 billion), a 3-year revolving credit facility (US$1.0 billion), and a 364-day term loan facility (EUR 1.5 billion).
  • 3Altria Group, Inc. is not a guarantor and has no direct obligations under these credit facilities.
  • 4The revolving credit facilities are for general corporate purposes, including commercial paper backstop.
  • 5The term loan facility will be used to refinance existing debt, specifically the May 12, 2005 term facility.
  • 6The credit agreement includes customary covenants and events of default, such as financial ratios (EBITDA to interest ratio of not less than 3.5 to 1) and bankruptcy clauses.
  • 7FTR Holding S.A., a PMI subsidiary, was designated as a borrower and its obligations are guaranteed by PMI.

Frequently Asked Questions

The new credit facilities are primarily for Philip Morris International Inc.'s (PMI) general corporate purposes. This includes providing liquidity for everyday operations and serving as a backstop for its commercial paper program. Additionally, the term loan facility is specifically intended to refinance existing debt obligations of PMI.

No, Altria Group, Inc. has no direct obligations or guarantees under these credit facilities. The credit agreement is between PMI (or its designated subsidiaries) and the lenders. This structure isolates the debt and associated risks primarily to PMI.

The total funding available includes a US$3.0 billion 5-year revolving credit facility, a US$1.0 billion 3-year revolving credit facility, and a EUR 1.5 billion 364-day term loan facility. In total, this represents approximately US$4.0 billion and EUR 1.5 billion in potential borrowing capacity.

Yes, the credit agreement requires PMI to maintain an EBITDA to interest ratio of not less than 3.5 to 1, as defined within the agreement. Additionally, the agreement contains customary events of default, which, if triggered and not cured, could lead to acceleration of loans and termination of commitments.