Debt

9 Months Ended

Sep. 30, 2023

Debt Disclosure [Abstract]

Debt

Debt

Short-term Borrowings and Borrowing Arrangements

At September 30, 2023 and December 31, 2022, we had no short-term borrowings.

In June 2023, we entered into a $2.0 billion term loan facility and borrowed the full amount available to fund a portion of the cash payments at the closing of the NJOY Transaction. In July 2023, upon receipt of the Remaining PMI Payment, we repaid

the term loan facility in full. For additional information regarding the NJOY Transaction and the Remaining PMI Payment, see Note 2. Acquisition of NJOY and Note 4. Goodwill and Other Intangible Assets, net, respectively.

At September 30, 2023, we had a $3.0 billion senior unsecured 5-year revolving credit agreement (as amended, the “Prior Credit Agreement”), which we used for general corporate purposes and was scheduled to expire on August 1, 2025.

At September 30, 2023, we had availability under the Prior Credit Agreement for borrowings of up to an aggregate principal amount of $3.0 billion and the applicable percentage for borrowings under the Prior Credit Agreement at that date was 1.0% based on our long-term senior unsecured debt ratings on that date. At September 30, 2023, we were in compliance with our covenants in the Prior Credit Agreement.

On October 24, 2023, we entered into a new senior unsecured 5-year revolving credit agreement (the “New Credit Agreement”) and terminated the Prior Credit Agreement. The terms of the New Credit Agreement are substantially similar to those of the Prior Credit Agreement.

The New Credit Agreement provides for borrowings up to an aggregate principal amount of $3.0 billion, expires on October 24, 2028 and includes an option, subject to certain conditions, for us to extend the New Credit Agreement for two additional one-year periods. We intend to use borrowings under the New Credit Agreement for general corporate purposes.

Pricing for interest and fees under the New Credit Agreement may be modified in the event of a change in the rating of our long-term senior unsecured debt. We expect interest rates on borrowings under the New Credit Agreement to be based on the Term Secured Overnight Financing Rate plus a percentage based on the higher of the ratings of our long-term senior unsecured debt from Moody’s Investors Service, Inc. and Standard & Poor’s Financial Services LLC. The New Credit Agreement does not include any other rating triggers or any provisions that could require the posting of collateral.

The New Credit Agreement includes various covenants, one of which requires us to maintain a ratio of consolidated earnings before interest, taxes, depreciation and amortization (“EBITDA”) to Consolidated Interest Expense of not less than 4.0 to 1.0, calculated as of the end of the applicable quarter on a rolling four quarters basis. The terms “Consolidated EBITDA” and “Consolidated Interest Expense,” each as defined in the New Credit Agreement, include certain adjustments.

Any commercial paper issued by us and any borrowings under the New Credit Agreement are guaranteed by PM USA.

Long-term Debt

The aggregate carrying value of our total long-term debt at September 30, 2023 and December 31, 2022 was $25.1 billion and $26.7 billion, respectively.

In May 2023, we repaid in full our 2.950% senior unsecured notes in the aggregate principal amount of $218 million at maturity. In addition, during the first quarter of 2023, we repaid in full our 1.000% senior unsecured Euro notes in the aggregate principal amount of $1.3 billion (€1.25 billion) at maturity.

At September 30, 2023 and December 31, 2022, accrued interest on our total debt of $190 million and $411 million, respectively, was included in other accrued liabilities on our condensed consolidated balance sheets.

For a discussion of the fair value of our long-term debt and the designation of our Euro denominated senior unsecured notes as a net investment hedge of our investment in ABI, see Note 6. Financial Instruments.