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Item 1.01. | Entry into a Material Definitive Agreement. |
On June 23, 2022, Philip Morris International Inc. (the “Company”) entered into a credit agreement (the “Credit Agreement”) relating to a senior unsecured term loan facility (the “Term Loan Facility”) with the lenders named therein and Citibank Europe PLC, UK Branch, as facility agent. The Term Loan Facility provides for borrowings up to an aggregate principal amount of €5,500,000,000 (approximately $5.8 billion at the date of signing), €3,000,000,000 (approximately $3.2 billion at the date of signing) of which expires 3 years after the occurrence of certain events as further described in the Credit Agreement, and €2,500,000,000 (approximately $2.6 billion at the date of signing) of which expires on June 23, 2027. The Credit Agreement was entered into in connection with the Company’s all-cash recommended public offer to the shareholders of Swedish Match AB, a public limited liability company organized under the laws of the Kingdom of Sweden (“Swedish Match”), for all the outstanding shares of Swedish Match (the “Offer”).
In connection with the Term Loan Facility, the aggregate principal amount of commitments was reduced to $11,000,000,000 under that certain 364-day bridge credit agreement, dated as of May 11, 2022 (as amended or modified from time to time prior to the date hereof, the “Bridge Credit Agreement”) among the Company, the lenders from time to time party thereto and Citibank Europe PLC, UK Branch as facility agent, which was also entered into in connection with the Offer. The Bridge Credit Agreement and the Credit Agreement collectively provide for borrowings up to a total aggregate principal amount of approximately the equivalent of $16,800,000,000.
Interest rates on borrowings under the Term Loan Facility will be based on prevailing interest rates for Euro and as further described in the Credit Agreement. The Term Loan Facility will be used, directly or indirectly, to finance the Offer, including currency exchange or other hedging arrangements and to pay fees and expenses incurred in connection with the Offer.
The Credit Agreement contains certain events of default customary for credit facilities of this type (with customary grace periods, as applicable), including nonpayment of principal or interest when due; material incorrectness of representations and warranties when made; breach of covenants; bankruptcy and insolvency; unsatisfied ERISA obligations; unstayed material judgment beyond specified periods; acceleration or payment default of other material indebtedness; and invalidation of the Company’s guaranty of subsidiary borrowings.
If any events of default occur and are not cured within applicable grace periods or waived, any outstanding loans may be accelerated and the lenders’ commitments may be terminated. The occurrence of a bankruptcy and insolvency event of default will result in the automatic termination of commitments and acceleration of outstanding loans under the Credit Agreement.
Certain of the lenders under the Credit Agreement and their respective affiliates have, from time to time, performed, and may in the future perform, various financial advisory, commercial and investment banking services for the Company, for which they received or will receive customary fees and expenses. Certain affiliates of the lenders are underwriters of certain of the Company’s note issuances. The Company and some of its subsidiaries may enter into foreign exchange and other derivative arrangements with certain of the lenders and their affiliates. In addition, certain of the lenders and their respective affiliates act as dealers in connection with the Company’s commercial paper programs.
The description above is a summary and is qualified in its entirety by the Credit Agreement, which is filed as Exhibit 10.1 to this report and is incorporated herein by reference.