DEBT

12 Months Ended

Dec. 30, 2023

DEBT

The following table presents the components of notes payable at year end December 30, 2023 and December 31, 2022:


(millions)	2023				2022
	Principal amount		Effective interest rate		Principal amount		Effective interest rate
U.S. commercial paper	$	—	—	%	$	330	4.46	%

Bank borrowings	121				137
Total	$	121			$	467

The following table presents the components of subordinated long-term debt at year end December 30, 2023 and December 31, 2022:


(millions)	2023		2022
4.50% $650 million U.S. Dollar Notes due 2046	$	639	$	639
5.25% $400 million U.S. Dollar Notes due 2033	397		—
7.45% $625 million U.S. Dollar Debentures due 2031	622		622
2.10% $500 million U.S. Dollar Notes due 2030	497		497
0.50% €300 million Euro Notes due 2029	329		317
4.30% $600 million U.S. Dollar Notes due 2028	552		539
3.40% $600 million U.S. Dollar Notes due 2027	598		597
3.25% $750 million U.S. Dollar Notes due 2026	747		745
1.25% €600 million Euro Notes due 2025	667		648
1.00% €600 million Euro Notes due 2024	655		617
2.65% $600 million U.S. Dollar Notes due 2023	—		547
2.75% $400 million U.S. Dollar Notes due 2023	—		210



Other	49		119
	5,752		6,097
Less current maturities	(663)		(780)
Balance at year end	$	5,089	$	5,317

During the first quarter of 2023, Kellanova issued $400 million of ten-year 5.25% Notes due 2033, resulting in net proceeds after discount and underwriting commissions of $396 million. The proceeds from these notes were used for general corporate purposes, including the payment of offering related fees and expenses, repayment of the $210 million 2.75% Notes when they matured on March 1, 2023, and repayment of a portion of commercial paper borrowings. The Notes contain customary covenants that limit the ability of the Company and its restricted subsidiaries (as defined) to incur certain liens or enter into certain sale and lease-back transactions, as well as a change of control provision.

In connection with the debt issuance, Kellanova terminated forward starting interest rate swaps with notional amounts totaling $400 million, resulting in a gain of $47 million in the first quarter of 2023. These derivatives were accounted for as cash flow hedges. The total net gain of $91 million, including those realized in prior periods, were recorded in accumulated other comprehensive income and will be amortized to interest expense over the term of the Notes. At the time of debt issuance, the effective interest rate on the Notes, reflecting issuance discount and hedge settlement was 3.06%.

In November 2022, the Company repaid the €600 million, five-year 0.80% Euro Notes due 2022, upon maturity.

All of the Company’s Notes contain customary covenants that limit the ability of the Company and its restricted subsidiaries (as defined) to incur certain liens or enter into certain sale and lease-back transactions and also contain a change of control provision. There are no significant restrictions on the payment of dividends by the Company. The Company was in compliance with all these covenants as of December 30, 2023.

The Company and two of its subsidiaries (the Issuers) maintain a program under which the Issuers may issue euro-commercial paper notes up to a maximum aggregate amount outstanding at any time of $750 million or its equivalent in alternative currencies. The notes may have maturities ranging up to 364 days and will be senior unsecured obligations of the applicable Issuer. Notes issued by subsidiary Issuers will be guaranteed by the Company. The notes may be issued at a discount or may bear fixed or floating rate interest or a coupon calculated by reference to an index or formula. There were no commercial paper notes outstanding under this program as of December 30, 2023 and December 31, 2022.

At December 30, 2023, the Company had $3.1 billion of short-term lines of credit and letters of credit, of which $3.0 billion were unused and available for borrowing primarily on an unsecured basis. These lines were comprised principally of the December 2021 unsecured $1.5 billion Five-Year Credit Agreement, which expires in December 2026, and an unsecured $1.0 billion 364-Day Credit Agreement.

The Five-Year Credit Agreement allows the Company to borrow, on a revolving credit basis, up to $1.5 billion, which includes the ability to obtain European swingline loans in an aggregate principal amount up to the equivalent of $300 million. In December 2021, the Company terminated the original Five-Year Credit Agreement, which was

originally set to expire in January of 2023, and entered into a new Five-Year Credit Agreement, which expires in December 2026.

In December 2023, the Company entered into an unsecured 364-Day Credit Agreement to borrow, on a revolving credit basis, up to $1.0 billion at any time outstanding, which is expected to mature in December 2024.

The Five-Year and 364 Day Credit Agreements which had no outstanding borrowings as December 30, 2023, contain customary covenants and warranties, including specified restrictions on indebtedness, liens and a specified interest expense coverage ratio. If an event of default occurs, then, to the extent permitted, the administrative agents may terminate the commitments under the credit facilities, accelerate any outstanding loans under the agreements, and demand the deposit of cash collateral equal to the lender's letter of credit exposure plus interest. The Company was in compliance with all financial covenants contained in these agreements at December 30, 2023 and December 31, 2022.

Scheduled principal repayments on long-term debt are (in millions): 2024–$671; 2025–$670; 2026–$757; 2027–$607; 2028–$608; 2028 and beyond–$2,519.

Financial institutions have issued standby letters of credit conditionally guaranteeing obligations on behalf of the Company totaling $68 million, including $67 million secured and $1 million unsecured, as of December 30, 2023. These obligations are related primarily to insurance programs. There were no amounts drawn down on the letters of credit as of December 30, 2023.

The Company has issued guarantees for a certain portion of debt of unconsolidated affiliates. These arrangements include cross guarantees back from the other shareholder in proportion to their ownership of the unconsolidated affiliates. These guarantees are not material to the Company.

Interest expense capitalized as part of the construction cost of fixed assets was immaterial for all periods presented.