Debt

Debt obligations

Our total borrowings as of June 30, 2016, and December 31, 2015, were comprised of the following:



	As of
	June 30, 2016			December 31, 2015
	(In millions)
Senior notes:
CAD 500 million 3.95% Series A notes due 2017	$	386.9		$	361.3
CAD 400 million 2.25% notes due 2018	309.5			289.0
CAD 500 million 2.75% notes due 2020	386.9			361.3
$300 million 2.0% notes due 2017⁽¹⁾	300.4			300.6
$500 million 3.5% notes due 2022⁽¹⁾	516.4			517.8
$1.1 billion 5.0% notes due 2042	1,100.0			1,100.0
Less: unamortized debt discounts and debt issuance costs	(19.9		)	(21.3		)
Total long-term debt (including current portion)	2,980.2			2,908.7
Less: current portion of long-term debt	(299.9		)	—
Total long-term debt	$	2,680.3		$	2,908.7

Short-term borrowings:
Cash pool overdrafts⁽²⁾	$	18.5		$	18.7
Short-term facilities⁽³⁾	11.6			7.5
Other short-term borrowings	17.0			2.5
Current portion of long-term debt	299.9			—
Current portion of long-term debt and short-term borrowings	$	347.0		$	28.7

(1)

During the fourth quarter of 2015, we settled our interest rate swaps that were in fair value hedge accounting relationships related to these notes at which time we ceased adjusting the carrying value of the related notes for the fair value movements of these swaps and began amortizing the cumulative adjustments to interest expense over the remaining term of the respective note. At the time of settlement, cumulative adjustments to the carrying value of the notes were $0.7 million and $18.1 million related to the $300 million and $500 million notes, respectively. See Note 12 "Debt" of the Notes included in our Annual Report for additional detail.


(2)	As of June 30, 2016, we had $18.5 million in bank overdrafts and $38.5 million in bank cash related to our cross-border, cross-currency cash pool for a net positive position of $20.0 million. As of December 31, 2015, we had $18.7 million in bank overdrafts and $39.6 million in bank cash related to our cross-border, cross-currency cash pool for a net positive position of $20.9 million.


(3)	We had total outstanding borrowings of $11.6 million and $7.5 million under our two Japanese Yen ("JPY") overdraft facilities as of June 30, 2016, and December 31, 2015, respectively. In addition, we have GBP and CAD lines of credit under which we had no borrowings as of June 30, 2016, or December 31, 2015.

Debt Fair Value Measurements

We utilize market approaches to estimate the fair value of certain outstanding borrowings by discounting anticipated future cash flows derived from the contractual terms of the obligations and observable market interest and foreign exchange rates. As of June 30, 2016, and December 31, 2015, the fair value of our outstanding long-term debt (including current portion) was $3,168.2 million and $2,883.4 million, respectively. All senior notes are valued based on significant observable inputs and classified as Level 2 in the fair value hierarchy. The carrying values of all other outstanding long-term borrowings and our short-term borrowings approximate their fair values and are also classified as Level 2 in the fair value hierarchy.

Financing of Pending Acquisition

In connection with the pending Acquisition announced during the fourth quarter of 2015, we entered into a 364-day bridge loan agreement by and among the Company, the lenders party thereto, and Citibank, N.A., as Administrative Agent. The bridge loan agreement provided for a 364-day bridge loan facility of up to $9.3 billion which was subsequently reduced to $6.8 billion as a result of the net proceeds received from our equity offering in the first quarter of 2016. Additionally, in connection with the pending Acquisition, we also entered into a term loan agreement by and among the Company, the lenders party thereto, and Citibank, N.A., as Administrative Agent during the fourth quarter of 2015. The term loan agreement provides for total term loan commitments of $1.5 billion in a 3-year tranche and $1.5 billion in a 5-year tranche, for an aggregate principal amount of $3.0 billion.

For the three and six months ended June 30, 2016, $20.2 million and $38.6 million, respectively, was recorded to other income (expense) related to amortization of commitment fees as well as other financing costs associated with the bridge loan. For the three and six months ended June 30, 2016, $1.9 million and $3.7 million, respectively, was recorded to interest expense related to amortization of issuance and other financing costs associated with the term loan. As of June 30, 2016, and December 31, 2015, there were no outstanding borrowings on the bridge loan or on the term loan.

Subsequent to June 30, 2016, on July 7, 2016, after the issuance of the senior notes discussed below under Debt Issuance Subsequent to Quarter End, the Company terminated the bridge loan agreement, and accelerated the remaining unamortized fees of approximately $24 million associated with the bridge loan to other income (expense) during the third quarter of 2016. MCBC did not borrow any amounts under the bridge loan agreement, and no payments were due as a result of such termination. Additionally, all related financing fees ceased upon termination of the bridge loan. See Note 16, "Pending Acquisition" for further details regarding the pending Acquisition.

Debt Issuance Subsequent to Quarter End



	As of
	July 7, 2016
	(In millions)
Senior notes:
CAD 500 million 2.84% notes due 2023	$	384.6
CAD 500 million 3.44% notes due 2026	384.6
$500 million 1.45% notes due 2019	500.0
$1.0 billion 2.10% notes due 2021	1,000.0
$2.0 billion 3.0% notes due 2026	2,000.0
$1.8 billion 4.2% notes due 2046	1,800.0
EUR 800 million 1.25% notes due 2024	885.0
Less: unamortized debt discounts and debt issuance costs	(64.2		)
Total new long-term debt offerings issued July 7, 2016	$	6,890.0

On July 7, 2016, MCBC issued $5.3 billion senior notes with portions maturing from July 15, 2019 through July 15, 2046 (“USD Notes”), and EUR 800.0 million senior notes maturing July 15, 2024 (“EUR Notes”), and Molson Coors International LP, a Delaware limited partnership and wholly-owned subsidiary of MCBC ("Molson Coors International LP"), completed a private placement of CAD 1.0 billion senior notes maturing July 15, 2023, and July 15, 2026 (“CAD Notes”), in order to partially fund the financing of the pending Acquisition (USD Notes, EUR Notes and CAD Notes, collectively, the “2016 Notes”). These issuances resulted in total proceeds of $6.9 billion, net of underwriting fees and discounts of $36.5 million and $17.7 million, respectively. Total estimated debt issuance costs capitalized in connection with these notes including underwriting fees, discounts as well as other financing related costs are $64.2 million and will be amortized over the respective terms of the 2016 Notes. The 2016 Notes began accruing interest upon issuance, with semi-annual interest payments due on the USD Notes and CAD Notes in January and July beginning in 2017, and annual interest payments due on the EUR Notes in July beginning in 2017. Our 2016 Notes are subject to a special mandatory redemption in the event that (i) we do not complete the pending Acquisition on or prior to November 11, 2016 (or, if pursuant to the purchase agreement the termination date is automatically extended, the date (not later than 18 months after November 11, 2015) to which the termination date is so extended) or (ii) if, prior to such date, we notify the trustee in writing that we will not pursue the pending Acquisition. The special mandatory redemption price will be equal to 101% of the aggregate principal amount of the applicable series of notes, plus accrued and unpaid interest from the issue date of the notes, up to, but excluding, the date of such special mandatory redemption. See Note 16, "Pending Acquisition" for further details regarding the pending Acquisition.

Prior to issuing the EUR Notes and the CAD Notes, we entered into foreign currency forward agreements to economically hedge the foreign currency exposure of a portion of the respective notes, which were subsequently settled on July 7, 2016, concurrent with the issuance of the 2016 Notes. Additionally, upon issuance we designated the EUR Notes as a net investment hedge of our Europe business. See Note 13, "Derivative Instruments and Hedging Activities" for additional information.

Other

As of June 30, 2016, and December 31, 2015, we had $750 million available to draw under our $750 million revolving multi-currency credit facility, as there were no outstanding borrowings on the revolving credit facility nor was there any outstanding commercial paper. As part of our anticipated financing for the pending Acquisition, we amended our $750 million revolving multi-currency credit facility during the fourth quarter of 2015, effective following the completion of the pending Acquisition to increase the maximum leverage ratio to 5.75x debt to EBITDA, with a decline to 3.75x debt to EBITDA in the fourth year following the closing of the pending Acquisition.

Under the terms of each of our debt facilities, we must comply with certain restrictions. These include restrictions on priority indebtedness (certain threshold percentages of secured consolidated net tangible assets), leverage thresholds, liens, and restrictions on certain types of sale lease-back transactions and transfers of assets. As of June 30, 2016, we were in compliance with all of these restrictions and have met all debt payment obligations. The restrictions related to our 2016 Notes issued subsequent to quarter end are substantially similar as those of our outstanding senior notes as of June 30, 2016, which all rank pari-passu.