| Item 1.01. | Entry into a Material Definitive Agreement. |
On May 26, 2023, Brown-Forman Corporation (the “Company”) entered into a Second Amended and Restated Five-Year Credit Agreement dated as of such date (the “Credit Agreement”) with the lenders party thereto and U.S. Bank National Association, as Administrative Agent. Bank of America, N.A., Barclays Bank PLC, Citibank N.A. and JPMorgan Chase Bank, N.A., acted as Co-Syndication Agents, The Bank of Nova Scotia, as Documentation Agent, and U.S. Bank National Association, BofA Securities, Inc., Barclays Bank PLC, Citibank, N.A. and JPMorgan Chase Bank, N.A., as Joint Lead Arrangers and Joint Bookrunners, in connection with the Credit Agreement. The Credit Agreement amends and restates in its entirety the Company’s existing amended and restated five-year credit agreement dated as of November 10, 2017, as amended, among the Company, certain lenders party thereto and U.S. Bank National Association, as Administrative Agent for such lenders (the “Existing Credit Agreement”). Pursuant to the Existing Credit Agreement, the lenders thereunder had committed to make an aggregate of up to $800,000,000 of unsecured loans available to the Company on a revolving basis on the terms and conditions thereof and such commitments were set to expire in November 2024.
Pursuant to the Credit Agreement, the lenders thereunder have committed to make an aggregate of up to $900,000,000 of unsecured loans available to the Company (and any of its subsidiaries that may elect to join the Company as a borrower thereunder) on a revolving basis on the terms and conditions thereof. The commitments of the lenders thereunder are scheduled to expire on May 26, 2028, the five-year anniversary of the Credit Agreement, and any outstanding loans thereunder shall mature on such date. The Company, at its option, may extend the initial maturity date twice, each for an additional one-year period, upon the satisfaction of certain conditions. In addition, the Company, at its option, may request that such lenders (and other lenders) provide additional commitments for an aggregate additional amount of up to $650,000,000 without the consent of any lenders not participating in such increase, subject to certain customary conditions. At the Company’s election, funds may be borrowed in U.S. dollars, Euro, Sterling, Australian dollars or other foreign currencies that are freely transferable and convertible into U.S. dollars.
Borrowings under the Credit Agreement will bear interest at a per annum rate determined by reference to the currency for such borrowing: (a) for borrowings denominated in U.S. dollars, Euro or Australian dollars for any requested interest period (of one, three or six months), the sum of (i) the Term Benchmark for such currency for such interest period (for (A) U.S. dollars, a Term SOFR screen rate (adjusted by 0.10%), (B) Euro, an EUROBOR screen rate (adjusted by the applicable statutory reserve rate) and (C) Australian dollars, an AUD screen rate (adjusted by the applicable statutory reserve rate)), plus (ii) an applicable rate determined by reference to the ratings of the Company’s senior, unsecured, long-term indebtedness (ranging from 0.575% to 1.00%), or (b) for borrowings denominated in Sterling for any day, the sum of (i) the Sterling overnight interest average rate for such day, plus, (ii) such applicable rate. A borrower may also elect that interest on a borrowing in U.S. dollars instead accrue for each day at a per annum alternate base rate for such day equal to the highest of (a) zero percent, (b) the prime rate announced from time to time by U.S. Bank National Association, (c) the sum of the New York Federal Reserve Bank’s federal funds effective rate plus 0.50% and (d) the sum of the Term SOFR screen rate (adjusted by 0.10%, but without giving effect to the applicable rate) for a one-month interest period plus 1.00%. The Credit Agreement contains conditions to funding, representations and warranties, affirmative covenants and negative covenants that are customary for these types of facilities. The Credit Agreement does not contain any financial covenants. The Credit Agreement also provides for certain events of default customary for such financings, including failure to observe covenants under the Credit Agreement, an event of material default under certain material indebtedness and certain bankruptcy events. The occurrence of any event of default under the Credit Agreement will limit the ability of the Company to borrow any loans and could result in the outstanding borrowings thereunder becoming due and immediately payable.
The foregoing description of the Credit Agreement does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Credit Agreement, a copy of which is attached as Exhibit 10.1 hereto and is incorporated herein by reference. Capitalized terms used in this Item 1.01 but not defined herein shall have the respective meanings set forth in the Credit Agreement.
The lenders under the Credit Agreement and their respective affiliates have provided and, in the future, may continue to provide investment banking, commercial banking and other financial services to the Company in the ordinary course of business for which they have received and are expected to receive customary compensation.
| Item 2.03. | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
The information set forth in Item 1.01 of this Current Report on Form 8-K regarding the Credit Agreement is hereby incorporated by reference into this Item 2.03 insofar as it relates to the creation of a direct financial obligation.
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