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Item 1.01.
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Entry into a Material Definitive Agreement.
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On September 29, 2021, Philip Morris International Inc. (“PMI”) entered into a credit agreement (the “Credit Agreement”) relating to a senior unsecured revolving credit facility (the “Facility”) with the lenders named therein, Citibank Europe PLC, UK Branch, as facility agent, and Citibank, N.A., as swingline agent. The Facility provides for borrowings up to an aggregate principal amount of US$2.5 billion (or the equivalent in Euro) and expires on September 29, 2026, unless extended as further described in the Credit Agreement.
Interest rates on borrowings under the Facility will be based on prevailing interest rates for U.S. Dollars or Euro, as applicable, and as further described in the Credit Agreement. The Facility maybe used for general corporate purposes. The Credit Agreement also contains business transformation-linked pricing adjustments that may result in the reduction or increase in both the interest rate and commitment fee under the Credit Agreement if PMI achieves, or fails to achieve, certain specified targets based on its business transformation goals, specifically to increase the percentage of PMI’s total net revenues from smoke-free products and increase the number of markets where PMI’s smoke-free products are available for sale.
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 PMI’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 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 PMI, for which they received or will receive customary fees and expenses. Certain affiliates of the lenders are underwriters of certain of PMI’s note issuances. PMI 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 PMI’s commercial paper programs.
The Facility replaces PMI’s existing US$3.5 billion (or the equivalent in Euro) revolving credit facility with the lenders named therein and Citibank Europe PLC, UK Branch (legal successor to Citibank International Limited), as facility agent, and Citibank, N.A., as swingline agent, which was to expire on October 1, 2022 (the “Terminated Facility”). The Terminated Facility was terminated effective September 29, 2021.
At September 29, 2021, PMI had no borrowings outstanding under the Terminated Facility.
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.