8-KMaterial AgreementsFinancial EventsExhibits & Filings

STARBUCKS CORP 8-K Report, Material Agreement (Nov 6, 2015)

Filed November 6, 2015For Securities:SBUX

Summary

Starbucks Corporation (SBUX) filed an 8-K on November 6, 2015, to report the entry into a new, larger, and more flexible revolving credit facility. This new facility totals $1.5 billion, with an accordion feature allowing for increases up to $2.25 billion, replacing a previous credit agreement. The new facility matures in five years, on November 6, 2020. This refinancing demonstrates Starbucks' strong credit standing and commitment to maintaining robust liquidity. The variable interest rate, tied to LIBOR or a Base Rate plus an applicable margin determined by credit ratings and financial ratios, suggests proactive treasury management. The termination of the older agreement in conjunction with the new one signifies a strategic move to optimize its financing structure.

Key Highlights

  • 1Starbucks entered into a new $1.5 billion unsecured, revolving credit facility on November 6, 2015.
  • 2The new credit facility matures on November 6, 2020, providing a five-year term.
  • 3The facility includes an accordion feature allowing Starbucks to increase commitments by up to $750 million, for a total potential facility size of $2.25 billion.
  • 4Borrowings will bear interest at a variable rate based on LIBOR or a Base Rate, plus an applicable margin tied to credit ratings and a fixed charge coverage ratio.
  • 5The agreement requires Starbucks to maintain a minimum fixed charge coverage ratio of 2.50 to 1.
  • 6The new credit facility replaces a previous agreement dated February 5, 2013, which was terminated concurrently.
  • 7The company's Chief Financial Officer, Scott Maw, signed the filing.

Frequently Asked Questions

This 8-K filing is primarily to report Starbucks' entry into a new, material definitive agreement, specifically a new revolving credit facility, and the termination of a previous credit agreement.

The new unsecured, revolving credit facility has a principal amount of $1.5 billion and is scheduled to mature on November 6, 2020, giving it a five-year term.

The facility offers significant flexibility. Starbucks can request an increase in aggregate commitments by up to $750 million, potentially bringing the total facility size to $2.25 billion, provided there is no default.

The interest rate is variable. It will be based on either the LIBOR rate or, for U.S. Dollar loans under certain conditions, the Base Rate, plus an applicable margin. This margin is determined by Starbucks' long-term credit ratings from Moody's and S&P, or its fixed charge coverage ratio, whichever results in a lower margin.