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Debt
6 Months Ended
Dec. 28, 2013
Debt [Abstract]  
Debt

 

5.  DEBT 

 

As of December 28, 2013, Sysco had uncommitted bank lines of credit which provides for unsecured borrowings for working capital of up to $95.0 million, of which none was outstanding.  Such amounts when outstanding are reflected in Notes payable on the consolidated balance sheet.  

 

Sysco and one of its subsidiaries, Sysco International, ULC, have a revolving credit facility supporting the company’s United States (U.S.) and Canadian commercial paper programs.  The facility provides for borrowings in both U.S. and Canadian dollars.  Borrowings by Sysco International, ULC under the agreement are guaranteed by Sysco, and borrowings by Sysco and Sysco International, ULC under the credit agreement are guaranteed by the wholly-owned subsidiaries of Sysco that are guarantors of the company’s senior notes and debentures.   The original facility in the amount of $1,000.0 million expires on December 29, 2016, and the extended facility in the amount of $925.0 million expires on December 29, 2017, but is subject to further extension.   As of December 28, 2013, commercial paper issuances outstanding were $400.0 million and were classified as long-term debt, as the company’s commercial paper programs are supported by the long-term revolving credit facility described above. 

 

During the 26-week period ended December 28, 2013, aggregate commercial paper issuances and short-term bank borrowings ranged from zero to approximately $769.5 million. 

 

The company’s Irish subsidiary, Pallas Foods, has a multicurrency revolving credit facility, which provides for capital needs for the company’s European subsidiaries.  In September 2013, the facility was extended and increased to €100.0 million (Euro).  This facility provides for unsecured borrowings and expires September 24, 2014, but is subject to extension.  Outstanding borrowings under this facility were €42.0 million (Euro) as of December 28, 2013, reflected in Notes payable on the consolidated balance sheet. 

 

       In December 2013, Sysco secured a commitment for an unsecured bridge facility in the amount of $3.3865 billion in connection with its proposed merger with US Foods, Inc. (US Foods) (discussed further in Note 12, Acquisitions). 

 

Subsequent Events

 

Subsequent to quarter-end, the following transactions were entered in contemplation of securing financing and hedging interest rate risk relating to our assumption or refinancing of US Foods’ net debt that will occur upon closing of the proposed merger.

 

In January 2014, the bridge facility commitment noted above was replaced with a $3.3865 billion bridge term loan agreement with multiple lenders.  Sysco may borrow up to $3.386.5 billion in term loans on the closing date of the US Foods acquisition to fund the acquisition, refinance certain indebtedness of US Foods and pay related fees and expenses. The facility expires on March 8, 2015, but is subject to extension if regulatory approvals have not yet been obtained.   Borrowings under the bridge term loan agreement are guaranteed by the same subsidiaries of Sysco that are guarantee the company’s revolving credit facility, and in certain circumstances may also be guaranteed by US Foods. 

 

In January 2014, the company entered into two forward starting swap agreements with notional amounts totaling of $2.0 billion. The company designated these derivatives as cash flow hedges of the variability in the cash outflows of interest payments on 10-year and 30-year debt due to changes in the benchmark interest rates for debt the company expects to issue in fiscal 2015.

 

In January 2014, Sysco and Sysco International, ULC, extended and increased the size of the revolving credit facility described above that supports the company’s U.S. and Canadian commercial paper programs.  The facility was increased to $1.5 billion with an expiration date of December 29, 2018, but is subject to further extension.  The other terms and conditions of the extended facility are substantially the same.