Summary
Philip Morris International Inc. (PMI) filed an 8-K report on March 3, 2014, detailing two significant financial events. First, on February 28, 2014, the company entered into a new US$2.5 billion senior unsecured revolving credit facility due to mature in February 2019. This facility replaces a previous one and is intended for general corporate purposes. It includes a covenant requiring an EBITDA to interest ratio of not less than 3.5 to 1.0. Second, on March 3, 2014, PMI announced the issuance of €1.75 billion in aggregate principal amount of senior unsecured notes: €750 million of 1.875% Notes due 2021 and €1 billion of 2.875% Notes due 2026. These notes are subject to customary covenants limiting the company's ability to incur secured debt and engage in sale/leaseback transactions. The proceeds from these note issuances will likely be used for general corporate purposes, complementing the new credit facility.
Key Highlights
- 1Philip Morris International (PMI) secured a new US$2.5 billion revolving credit facility, maturing in February 2019, to support general corporate needs.
- 2The new credit facility replaces an existing US$2.5 billion facility set to expire in March 2015.
- 3PMI reported no outstanding borrowings under its previous credit facility as of February 28, 2014.
- 4The company issued €1.75 billion in new debt, comprising €750 million of 1.875% Notes due 2021 and €1 billion of 2.875% Notes due 2026.
- 5These new notes are senior unsecured obligations, ranking equally with existing unsecured debt.
- 6The note issuances are subject to customary covenants, including limitations on secured debt and sale/leaseback transactions.
- 7The new credit agreement mandates a minimum EBITDA to interest coverage ratio of 3.5 to 1.0.