Debt

Debt obligations

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



	As of
	September 30, 2016			December 31, 2015
	(In millions)
Senior notes:
CAD 500 million 3.95% Series A notes due 2017	$	380.9		$	361.3
CAD 400 million 2.25% notes due 2018	304.7			289.0
CAD 500 million 2.75% notes due 2020	380.9			361.3
CAD 500 million 2.84% notes due 2023⁽¹⁾	380.9			—
CAD 500 million 3.44% notes due 2026⁽¹⁾	380.9			—
$300 million 2.0% notes due 2017⁽²⁾	300.3			300.6
$500 million 1.45% notes due 2019⁽¹⁾	500.0			—
$1.0 billion 2.10% notes due 2021⁽¹⁾	1,000.0			—
$500 million 3.5% notes due 2022⁽²⁾	515.7			517.8
$2.0 billion 3.0% notes due 2026⁽¹⁾	2,000.0			—
$1.1 billion 5.0% notes due 2042	1,100.0			1,100.0
$1.8 billion 4.2% notes due 2046⁽¹⁾	1,800.0			—
EUR 800 million 1.25% notes due 2024⁽¹⁾	898.8			—
Less: unamortized debt discounts and debt issuance costs	(82.5		)	(21.3		)
Total long-term debt (including current portion)	9,860.6			2,908.7
Less: current portion of long-term debt	(299.9		)	—
Total long-term debt	$	9,560.7		$	2,908.7

Short-term borrowings:
Cash pool overdrafts⁽³⁾	$	0.4		$	18.7
Short-term facilities⁽⁴⁾	10.9			7.5
Other short-term borrowings	15.7			2.5
Current portion of long-term debt	299.9			—
Current portion of long-term debt and short-term borrowings	$	326.9		$	28.7

(1)

On July 7, 2016, MCBC issued approximately $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 Acquisition (USD Notes, EUR Notes and CAD Notes, collectively, the “2016 Notes”). These issuances resulted in total proceeds of approximately $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 and other financing related costs, are $64.2 million and are being 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.

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 further details.

Additionally, in order to maximize the yield on the cash received from the issuance of the 2016 Notes and the February 3, 2016, equity issuance, while maintaining the ability to readily access these funds, MCBC strategically invested the proceeds in various fixed rate deposit and money market accounts with terms of one month or less as of September 30, 2016. We have accordingly recorded interest income of $10.6 million and $17.0 million, respectively, for the three and nine months ended September 30, 2016, respectively within interest income (expense).

(2)

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.


(3)	As of September 30, 2016, we had $0.4 million in bank overdrafts and $36.3 million in bank cash related to our cross-border, cross-currency cash pool for a net positive position of $35.9 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.


(4)	We had total outstanding borrowings of $10.9 million and $7.5 million under our two Japanese Yen ("JPY") overdraft facilities as of September 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 September 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 September 30, 2016, and December 31, 2015, the fair value of our outstanding long-term debt (including the current portion of long-term debt) was approximately $10.4 billion and $2.9 billion, 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 Acquisition

In connection with the 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 approximately $9.3 billion which was subsequently reduced to approximately $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 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 provided 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. On October 11, 2016, in connection with the closing of the Acquisition, we borrowed $1.0 billion under the 3-year tranche and $1.5 billion under the 5-year tranche, for an aggregate principal amount of $2.5 billion. We bear monthly interest on these term loans at the rate of 1.50% + 1-month LIBOR. The proceeds were used to partially fund the Acquisition and no additional amounts are available for borrowing under the term loan agreement.

For the three and nine months ended September 30, 2016, $24.8 million and $63.4 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 nine months ended September 30, 2016, $1.9 million and $5.6 million, respectively, was recorded to interest expense related to amortization of issuance and other financing costs associated with the term loan. As of September 30, 2016, and December 31, 2015, there were no outstanding borrowings on the term loan.

On July 7, 2016, after the issuance of the 2016 Notes discussed above, the Company terminated the bridge loan agreement, and accelerated the remaining unamortized fees of $24.8 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 during 2015 or 2016, 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, "Acquisition" for further details regarding the Acquisition.

Other

As of September 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 financing for the Acquisition, we amended our $750 million revolving multi-currency credit facility during the fourth quarter of 2015, effective following the completion of the Acquisition, to increase the maximum leverage ratio to 5.75x debt to earnings before interest expense, tax expense, depreciation and amortization ("EBITDA"), with a decline to 3.75x debt to EBITDA in the fourth year following the closing of the 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 September 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 are substantially similar to those of our other outstanding senior notes as of September 30, 2016, which all rank pari-passu.