Item 1.01. Entry into a Material Definitive Agreement.
On July 8, 2022, Kraft Heinz Foods Company (“KHFC”) and The Kraft Heinz Company (the “Company”) entered into a new Credit Agreement (the “Credit Agreement”) with JPMorgan Chase Bank, N.A., as administrative agent, JPMorgan Chase Bank, N.A., BofA Securities, Inc., Barclays Bank PLC, Citibank, N.A., Deutsche Bank Securities Inc., Morgan Stanley Senior Funding, Inc., Royal Bank of Canada, and Wells Fargo Securities, LLC, as revolving joint lead arrangers and revolving joint bookrunners, Bank of America, N.A., Barclays Bank PLC, Citibank, N.A., Deutsche Bank Securities Inc., Morgan Stanley Senior Funding, Inc., Royal Bank of Canada, and Wells Fargo Bank, National Association, as revolving syndication agents, and the lenders named therein.
The Credit Agreement replaces KHFC’s and the Company’s existing $4.0 billion revolving credit facility that was scheduled to mature on July 6, 2025 (the “Existing Credit Agreement”). The Credit Agreement provides for a five-year senior unsecured revolving credit facility in an aggregate amount of $4.0 billion (the “New Revolving Credit Facility”). The New Revolving Credit Facility includes a $1.0 billion sublimit for borrowings in Canadian dollars, euro, or British pound sterling as well as a swingline sub-facility of up to $400 million, a letter of credit sub-facility of up to $300 million, and a competitive bid loan facility under which Borrowers (defined below) may borrow on a non-ratable basis from one or more of the lenders under the New Revolving Credit Facility. Additionally, and subject to certain conditions, KHFC may increase the amount of revolving commitments and/or add tranches of term loans to KHFC in a combined aggregate amount of up to $1.0 billion.
The New Revolving Credit Facility is available to KHFC and any wholly owned subsidiary of KHFC designated by KHFC (each, a “Subsidiary Borrower” and, together with KHFC, the “Borrowers”) and will mature on July 8, 2027. KHFC may periodically request the extension of the revolving maturity date by one year periods. The New Revolving Credit Facility may be prepaid at any time and unused commitments may be reduced at any time, in whole or in part, at the option of the borrower, without premium or penalty (subject to notice periods and minimum amounts). The competitive bid loans may not be prepaid except as on the terms set forth in the applicable competitive bid note evidencing the competitive bid loan.
The obligations under the New Revolving Credit Facility are guaranteed by KHFC and the Company in the case of indebtedness and other liabilities of any Subsidiary Borrower.
Interest rates on obligations under the New Revolving Credit Facility are based on prevailing annual interest rates for Term SOFR/EURIBOR/CDOR loans or an alternative base rate/Canadian prime rate, in each case subject to an applicable margin based upon the long-term senior unsecured, non-credit enhanced debt rating assigned to KHFC.
KHFC will pay certain recurring fees with respect to the New Revolving Credit Facility, including (1) fees on the unused commitments of the lenders under the New Revolving Credit Facility, and (2) a participation fee and fronting fee on the aggregate face amounts of outstanding letters of credit.
The Credit Agreement also contains customary representations, covenants, and events of default.
The financial institutions party to the Credit Agreement have performed and may continue to perform commercial banking and financial services for KHFC and/or the Company for which they have received and will continue to receive customary fees.
The foregoing description of the Credit Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Credit Agreement, which is filed hereto as Exhibit 10.1.
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