UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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SECTION 2 – FINANCIAL INFORMATION
| Item 1.01 | Entry into a Material Definitive Agreement |
Revolving Credit Facility
On May 6, 2021, Hormel Foods Corporation (the “Company”) entered into an unsecured revolving credit agreement with Wells Fargo Bank, National Association as Administrative Agent, Swingline Lender and Issuing Lender, U.S. Bank National Association, JPMorgan Chase Bank, N.A. and BofA Securities, Inc. as Syndication Agents and the lenders party thereto (the “Revolving Credit Agreement”). In connection with entering the Revolving Credit Agreement, the Company terminated its existing credit facility that was entered into on June 24, 2015.
The Revolving Credit Agreement provides for an unsecured revolving credit facility with an aggregate principal commitment amount at any time outstanding of up to $750,000,000 with an uncommitted increase option of an additional $375,000,000 upon the satisfaction of certain conditions. Extensions of credit under the facility may be applied by the Company to refinance existing indebtedness and for working capital and other general corporate purposes, including funding a portion of the Planters® acquisition and other acquisition funding, and may be made in the form of revolving loans, swingline loans and letters of credit. Subject to the terms set forth in the Revolving Credit Agreement, the Company may borrow, prepay and re-borrow amounts under the facility at any time prior to the termination of the facility.
The lenders will receive a facility fee of between 0.050-0.100% that accrues on the daily amount of the revolving commitment held by each lender, and such facility fee is adjusted based upon the Company’s debt rating issued by S&P and Moody’s. Interest on funds borrowed under the Revolving Credit Agreement will be charged at either a eurocurrency rate or a base rate to be selected by the Company at the time of borrowing plus an applicable margin of between 0.575-1.150% for eurocurrency rate loans and 0.0-0.150% for base rate loans, depending on the Company’s debt rating issued by S&P and Moody’s.
The Revolving Credit Agreement contains customary representations and warranties, covenants and events of default, including, without limitation, a financial covenant that prevents the Company from permitting its consolidated leverage ratio to exceed 3.00 to 1.00 subject to adjustment after certain material acquisitions.
The lending commitments under the Revolving Credit Agreement are scheduled to expire on May 6, 2026, at which time the Company will be required to pay in full all obligations then outstanding.
This description of the Revolving Credit Agreement is qualified in its entirety by reference to the full text of the Revolving Credit Agreement, a complete copy of which is attached hereto as Exhibit 10.1 and is hereby incorporated by reference in response to this Item 1.01.
Term Loan Agreement
On May 6, 2021, the Company entered into an unsecured term loan agreement with Wells Fargo Bank, National Association as Administrative Agent and Lender (the “Term Loan Agreement”).
The Term Loan Agreement provides for an unsecured term loan facility with a single term loan in a principal amount not to exceed $300,000,000. Extensions of credit under the facility may be applied by the Company for working capital and other general corporate purposes, including funding a portion of the Planters® acquisition and other acquisition funding.
The lenders will receive a ticking fee of 0.05% per annum that accrues on the average daily amount of the unused term loan commitments during the period from June 8, 2021 until the earlier of June 30, 2021 or the date of the draw on the Term Loan Agreement. Interest on funds borrowed under the Term Loan Agreement will be charged at either a LIBOR rate or a base rate to be selected by the Company at the time of borrowing plus an applicable margin of 0.525% for LIBOR rate loans and 0.00% for base rate loans.
The Term Loan Agreement contains customary representations and warranties, covenants and events of default, consistent with the Revolving Credit Agreement.
The lending commitments under the Term Loan Agreement are scheduled to expire on May 5, 2022, at which time the Company will be required to pay in full all obligations then outstanding.
This description of the Term Loan Agreement is qualified in its entirety by reference to the full text of the Term Loan Agreement, a complete copy of which is attached hereto as Exhibit 10.2 and is hereby incorporated by reference in response to this Item 1.01.
In the ordinary course of business, the Company and its affiliates have engaged, and may in the future engage, certain parties to the Revolving Credit Agreement, the Term Loan Agreement or the affiliates of such parties to provide commercial banking, investment banking, product distribution and other services for which the Company or its affiliates pay customary fees and commissions.
| Item 2.03 | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant |
The disclosure set forth under Item 1.01 is incorporated herein by reference.
| Item 9.01 | Financial Statements and Exhibits |
(d) Exhibits
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.
| HORMEL FOODS CORPORATION | ||
| (Registrant) | ||
| Dated: May 6, 2021 | By | /s/ James N. Sheehan |
| JAMES N. SHEEHAN | ||
| Executive Vice President and | ||
| Chief Financial Officer |