| Item 1.01 | Entry into a Material Definitive Agreement. |
Revolving Credit Agreement
On August 19, 2021, The J. M. Smucker Company (the “Company”) and its subsidiary, Smucker Foods of Canada Corp. (the “Canadian Borrower”), and certain U.S. subsidiaries of the Company designated from time to time as a borrower (“Designated Borrowers”), entered into that certain Revolving Credit Agreement (the “Revolving Credit Agreement”) with the various lenders named therein and Bank of America, N.A., as administrative agent for the lenders (the “Revolving Agent”).
The Revolving Credit Agreement provides for a $2.0 billion unsecured revolving credit facility that matures on the fifth anniversary of the date of such agreement. Borrowings under the facility are available to the Company and Designated Borrowers in U.S. Dollars and Euros and available to the Canadian Borrower in Canadian Dollars. The Company guarantees all obligations of the Canadian Borrower and Designated Borrowers under the Revolving Credit Agreement. Borrowings under the Revolving Credit Agreement will bear interest, at the Company’s option, at either a base rate or a LIBOR rate (in the case of U.S. Dollar-denominated loans), at the CDOR rate (in the case of Canadian Dollar-denominated loans), or at a EURIBOR rate (in the case of Euro-denominated loans), in each case plus an applicable margin. The applicable margins on base rate loans range from 0.00% to 0.425% and the applicable margins on LIBOR, CDOR, and EURIBOR loans range from 0.785% to 1.425%, in each case based on the Company’s long-term unsecured senior debt rating.
Under the terms of the Revolving Credit Agreement, the Company must maintain, as of the last day of each fiscal quarter commencing with the first fiscal quarter ending after the date of the Revolving Credit Agreement, a ratio of EBITDA to interest expense of at least 3.75 to 1.00. Such test is subject to certain exceptions and qualifications set forth in the Revolving Credit Agreement.
The Revolving Credit Agreement contains customary representations and warranties and customary affirmative and negative covenants. The Revolving Credit Agreement also contains certain customary events of default. Subject to certain funds provisions, if an Event of Default (as defined in the Revolving Credit Agreement) has occurred and is continuing, the Revolving Agent may declare that outstanding loans and any accrued interest and fees are due and payable by the applicable borrower.
Several of the lenders under the Revolving Credit Agreement and their affiliates have various relationships with the Company and its subsidiaries involving the provision of financial services, including investment banking, commercial banking, advisory, cash management, custody, and trust services for which they receive customary fees and may do so in the future.
A copy of the Revolving Credit Agreement is included herein as Exhibit 10.1 and is incorporated herein by reference. The foregoing description of the Revolving Credit Agreement is qualified in its entirety by reference to the full text of the Revolving Credit Agreement.
Increase in Size of Commercial Paper Program
As previously disclosed in a Current Report on Form 8-K filed on August 7, 2014, the Company entered into a commercial paper program (the “CP Program”) on August 1, 2014 under which the Company may issue short-term, unsecured commercial paper notes (the “Notes”) pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”). On August 19, 2021, the Company increased the amount of Notes that it may issue from time to time under the CP Program to an aggregate amount not to exceed $2.0 billion outstanding at any time. The Notes will have maturities of up to 270 days from date of issue and will not be subject to voluntary prepayment by the Company or redemption prior to maturity. The Notes will rank
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