CALCULATION OF REGISTRATION FEE
|
|
|
|
|
|
|
|
|
Title of each class of securities
to be registered
|
|
Aggregate
offering price
|
|
|
Amount of
registration fee(1)
|
|
Debt Securities and Guarantees thereof
|
|
$
|
600,000,000
|
|
|
$
|
68,760.00
|
|
(1)
|
Calculated in accordance with Rule 457(r) of the Securities Act of 1933, as amended (the Securities Act).
|
Filed Pursuant to Rule 424(b)(2)
Registration No. 333-179266
PROSPECTUS SUPPLEMENT
(To Prospectus Dated April 10, 2012)
$600,000,000
6% Senior Notes due 2022
The Company:
|
|
We are the worlds leading premium wine company with a broad portfolio of consumer-preferred premium wine brands complemented by premium spirits,
imported beer and other select beverage alcohol products.
|
The Offering:
|
|
Use of Proceeds: We intend to use the net proceeds from the offering of the Senior Notes due 2022, which we refer to as the notes, for general
corporate purposes, which purposes might include, among others, reducing indebtedness outstanding under the term loan portion of our senior credit facility, acquisitions of complementary assets or businesses or common stock share repurchases. The
facilities under our senior credit agreement, as refinanced, extended, substituted, replaced or renewed from time to time, are referred to collectively as our senior credit facility.
|
The Notes:
|
|
Issuer: Constellation Brands, Inc.
|
|
|
Maturity: The notes will mature on May 1, 2022.
|
|
|
Interest Payments: The notes will pay interest semi-annually in cash in arrears on May 1 and November 1 of each year, commencing November 1, 2012.
|
|
|
Guarantees: Certain of our existing and future subsidiaries will guarantee the notes on a senior unsecured basis to the extent and for so long as such
entities guarantee our senior credit facility.
|
|
|
Ranking: The notes will rank equally in right of payment with all of our existing and future unsecured senior indebtedness, senior in right of payment
to any indebtedness that is expressly subordinated to the notes, and effectively subordinated in right of payment to our secured indebtedness to the extent of the value of the assets securing such indebtedness, including all borrowings under our
senior credit facility.
|
|
|
Optional Redemption: The notes may be redeemed, in whole or in part at a price equal to 100% of the principal amount thereof, together with accrued and
unpaid interest to the redemption date, plus a make-whole premium.
|
|
|
Change of Control: If we experience specific kinds of changes of control, we must offer to repurchase all of the notes at 101% of their principal
amount, plus accrued and unpaid interest, if any, to the repurchase date.
|
This investment
involves risks. See
Risk Factors
beginning on page S-9.
Neither the
Securities and Exchange Commission nor any state securities commission has approved or disapproved of the notes or determined if this prospectus supplement or the accompanying prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.
|
|
|
|
|
|
|
|
|
|
|
|
Per Senior Note
|
|
Total
|
Public Offering Price
(1)
|
|
100.00%
|
|
$600,000,000
|
Underwriting Discount
|
|
1.25%
|
|
$ 7,500,000
|
Proceeds to Constellation Brands (before expenses)
|
|
98.75%
|
|
$592,500,000
|
|
|
|
|
|
(1)
|
|
Plus accrued interest from April 17, 2012.
|
Interest on the notes will accrue from April 17, 2012.
The notes will be
ready for delivery in book-entry form only through The Depository Trust Company on or about April 17, 2012.
Joint Book
Running Managers
|
|
|
|
|
|
|
BofA Merrill Lynch
|
|
|
|
|
|
|
|
|
J.P. Morgan
|
|
|
|
|
|
|
|
|
Rabo Securities
|
|
|
|
|
|
|
|
|
Barclays
|
Lead Manager
Co-Manager
April 10, 2012
You should rely only on the information contained or incorporated by reference in this
prospectus supplement, the accompanying prospectus or documents to which we otherwise refer you. We have not, and the underwriters have not, authorized anyone to provide you with different information. If anyone provides you with different or
inconsistent information, you should not rely on it. We are not, and the underwriters are not, making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should not assume that the information
appearing in this prospectus supplement, the accompanying prospectus and any document incorporated by reference is accurate as of any date other than the date on the front cover of the applicable document. Our business, financial condition, results
of operations and prospects may have changed since that date.
TABLE OF CONTENTS
Unless the context requires otherwise, references to we, us, our and the Company refer
collectively to Constellation Brands, Inc. and its subsidiaries except that in the sections entitled Prospectus Supplement SummaryThe Offering, and Description of the Notes and the Guarantees such terms refer only to
Constellation Brands, Inc. and not any of its subsidiaries.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission, or the
SEC. You may read and copy any document we file with the SEC at the SECs Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You may obtain further information on the operation of the Public Reference Room by calling the SEC
at 1-800-SEC-0330. Our SEC filings are also available to the public over the Internet at the SECs website at http://www.sec.gov. Our class A and class B common stock are listed on the New York Stock Exchange, and you may inspect our SEC
filings at the offices of the New York Stock Exchange, 20 Broad Street, New York, New York 10005.
The SEC allows us to
incorporate by reference into this prospectus supplement the information we file with the SEC, which means that we can disclose important information to you by referring you to previously filed documents. The information incorporated by
reference is considered to be part of this prospectus supplement, unless we update or supersede that information by the information contained in this prospectus supplement or by information that we file subsequently that is incorporated by reference
into this prospectus supplement.
We incorporate by reference into this prospectus supplement the following documents or
information filed with the SEC (other than, in each case, documents or information deemed to have been furnished and not filed in accordance with SEC rules):
|
|
|
Annual Report on Form 10-K for the fiscal year ended February 28, 2011 filed on April 29, 2011;
|
|
|
|
Quarterly Reports on Form 10-Q for the fiscal quarter ended May 31, 2011 filed on July 11, 2011; for the fiscal quarter ended August 31,
2011 filed on October 11, 2011; and for the fiscal quarter ended November 30, 2011 filed on January 9, 2012;
|
|
|
|
An Amendment to our Quarterly Report on Form 10-Q for the fiscal quarter ended November 30, 2010 filed on August 10, 2011;
|
|
|
|
Current Reports on Form 8-K filed on April 8, 2011; April 29, 2011; June 1, 2011 (Item 5.02 only); July 25, 2011 (Items
5.02 and 5.07 only); and April 5, 2012 (of two reports filed on that date, only the one reporting information under Items 5.02 and 9.01);
|
|
|
|
The description of our class A common stock, par value $.01 per share, and class B common stock, par value $.01 per share, contained in Item 1 of
our registration statement on Form 8-A filed on October 4, 1999; and
|
|
|
|
All documents filed by the Company under Sections 13(a), 13(c), 14 or 15(d) of Securities Exchange Act of 1934, as amended, on or after the date of
this prospectus supplement and before the termination of this offering.
|
This prospectus supplement and the
accompanying prospectus are part of a registration statement we have filed with the SEC relating to the notes offered by this prospectus supplement and other debt securities. As permitted by SEC rules, this prospectus supplement and the accompanying
prospectus do not contain all of the information included in the registration statement and the accompanying exhibits and schedules we file with the SEC. You may refer to the registration statement, the exhibits and schedules for more information
about us and our debt securities. The registration statement, exhibits and schedules are also available at the SECs Public Reference Room or through its website. In addition, we post the periodic reports that we file with the SEC on our
website at http://www.cbrands.com. You may also obtain a copy of these filings, at no cost, by writing to or telephoning us at the following address:
Constellation Brands, Inc.
207 High Point Drive, Building 100
Victor, New York 14564
585-678-7100
Attention: David S. Sorce, Secretary
S-2
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus supplement, the accompanying prospectus and the documents incorporated or deemed to be incorporated by reference herein
contain forward-looking statements that involve risks and uncertainties, including those discussed under the caption Risk Factors. We develop forward-looking statements by combining currently available information with our beliefs and
assumptions. These statements relate to future events, including our future performance, and often contain words such as may, should, could, expects, seeks to, anticipates,
plans, believes, estimates, intends, predicts, projects, potential or continue or the negative of such terms and other comparable terminology.
Forward-looking statements are inherently uncertain, and actual performance or results may differ materially and adversely from that expressed in, or implied by, any such statements. Consequently, you should recognize these statements for what they
are and we caution you not to rely upon them as facts.
S-3
PROSPECTUS SUPPLEMENT SUMMARY
This summary highlights selected information about the Company and this offering. It does not contain all of the information that may
be important to you in deciding whether to purchase notes. We encourage you to read the entire prospectus supplement, the accompanying prospectus and the documents that we have filed with the SEC that are incorporated by reference prior to deciding
whether to purchase notes.
Constellation Brands, Inc.
We are the worlds leading premium wine company with a leading market position in both of our primary markets, which are the United
States (U.S.) and Canada. Our wine portfolio is complemented by select premium spirits brands and other select beverage alcohol products. We are also the leading marketer of imported beer in the U.S. through our investment in Crown Imports LLC, a
joint venture with Grupo Modelo, S.A.B. de C.V., which we refer to below as Crown, pursuant to which Grupo Modelos Mexican beer portfolio is imported, marketed and sold by the joint venture in the U.S., along with certain other imported
brands.
Since our founding in 1945 as a producer and marketer of wine products, we have grown through a combination of
internal growth and acquisitions. Our internal growth has been driven by leveraging our existing portfolio of leading brands, developing new products, new packaging and line extensions, and focusing on the faster growing sectors of the beverage
alcohol industry. We conduct our business through entities we wholly own as well as a variety of joint ventures with various other entities, both within and outside the U.S.
Corporate Information
Our principal executive offices are located
at 207 High Point Drive, Building 100, Victor, New York 14564 and our telephone number is 585-678-7100. We maintain a website at www.cbrands.com. Our website and the information contained on that site, or connected to that site, are not incorporated
into this prospectus, and you should not rely on any such information in making your decision whether to purchase our securities. We are a Delaware corporation that was incorporated on December 4, 1972, as the successor to a business founded in
1945. On September 19, 2000, we changed our name to Constellation Brands, Inc. from Canandaigua Brands, Inc.
Recent
Developments
Earnings
On April 5, 2012, we issued a press release announcing unaudited financial results for the fiscal quarter and fiscal year ended February 29, 2012 (which we refer to as fourth quarter fiscal 2012
and fiscal 2012, respectively). We have not yet finalized our financial statements as of February 29, 2012, and for fourth quarter fiscal 2012 and fiscal 2012, including all disclosures required by accounting principles generally accepted in
the U.S. (GAAP), and our auditors have not yet completed their audit of these financial statements. Accordingly, financial information as of February 29, 2012, and for fourth quarter fiscal 2012 and fiscal 2012 is subject to further revision as
we finalize these financial statements, including all disclosures required by GAAP, and as our auditors conduct their audit of these financial statements. Set forth below are our preliminary operating results for fourth quarter fiscal 2012 and
fiscal 2012, as well as for our fiscal quarter and fiscal year ended February 28, 2011 (which we refer to as fourth quarter fiscal 2011 and fiscal 2011, respectively):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2011
|
|
|
Fiscal 2012
|
|
|
Fourth Quarter
Fiscal
2011
|
|
|
Fourth Quarter
Fiscal 2012
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
(Unaudited)
|
|
|
|
(Unaudited)
|
|
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated net sales
|
|
$
|
3,332
|
|
|
$
|
2,654
|
|
|
$
|
715
|
|
|
$
|
628
|
|
Operating income
|
|
$
|
503
|
|
|
$
|
487
|
|
|
$
|
103
|
|
|
$
|
79
|
|
Equity in earnings of equity method investees
|
|
$
|
244
|
|
|
$
|
229
|
|
|
$
|
52
|
|
|
$
|
49
|
|
Net income
|
|
$
|
560
|
|
|
$
|
445
|
|
|
$
|
280
|
|
|
$
|
103
|
|
S-4
Reported consolidated net sales decreased 12 percent for fourth quarter fiscal 2012
compared to fourth quarter fiscal 2011 primarily due to the divestiture of the Australian and U.K. wine business.
The
decrease in operating income for fourth quarter fiscal 2012 compared to fourth quarter fiscal 2011 was primarily due to the impairment of certain intangible assets and the divestiture of the Australian and U.K. wine business, partially offset by
higher net sales in North America and lower corporate expenses.
Equity in earnings in Crown totaled $49 million for fourth
quarter fiscal 2012, an increase of two percent over fourth quarter fiscal 2011. For fourth quarter fiscal 2012, Crown generated net sales of $525 million, an increase of nine percent, and operating income of $99 million, an increase of two percent,
in each case, compared to fourth quarter fiscal 2011. The increase in net sales for Crown was primarily driven by volume growth. Operating income increased primarily due to higher net sales partially offset by increased marketing spend.
For fourth quarter fiscal 2012, pre-tax restructuring charges and unusual items totaled $44 million compared to $1 million for fourth
quarter fiscal 2011 primarily due to the impairment of certain intangible assets.
Interest expense totaled $48 million for
fourth quarter fiscal 2012, an increase of one percent over fourth quarter fiscal 2011.
Our effective tax rate for fourth
quarter fiscal 2012 was negative 28.0 percent compared to negative 161.5 percent for fourth quarter fiscal 2011. Our effective tax rate for fiscal 2012 was 17 percent compared to negative 2 percent for fiscal 2011. All periods reflect the favorable
outcome of various tax items.
At February 29, 2012, we had cash and cash investments of $86 million, total debt of $3
billion and total stockholders equity of $3 billion.
Common Stock Repurchases and Authorizations
We repurchased 21.2 million shares of common stock at a cost of $414 million during fiscal 2012. Subsequent to the end of fiscal 2012
through March 31, 2012, we repurchased an additional 2.1 million shares at a cost of $46 million. Through March 31, 2012, we have repurchased a total of 23.3 million shares at a cost of $460 million under our current $500 million
share repurchase authorization.
Our board of directors has authorized the repurchase of up to $1.0 billion of our common
stock which is in addition to the current $500 million share repurchase authorization. Subject to market conditions and managements discretion, we currently expect to execute the new $1.0 billion share repurchase authorization from time to
time over a two-year period, and in the year ended February 28, 2013, to use approximately 50 percent of this new authorization.
Possible Refinancing of Senior Credit Facility
We are currently considering refinancing and replacing our current senior credit facility with a new senior credit facility that, subject to adjustment, would consist of:
|
|
|
up to a $850.0 million five year revolving credit facility (which we currently expect would be undrawn exclusive of letter of credit usage at the time
of initial closing of the new facility),
|
|
|
|
five year term loans of up to $550.0 million with quarterly amortization of principal totaling between 5% and 10% per year prior to final
maturity,
|
|
|
|
seven year term loans of up to $250.0 million with quarterly amortization of principal prior to final maturity in annual amounts of 1.0% per annum,
and
|
S-5
|
|
|
an up to $750.0 million uncommitted incremental facility that may be used to increase the revolver or add a tranche of term loans, subject to pro forma
compliance with the financial covenants.
|
We expect that the collateral, guarantees and financial
maintenance covenants for the new senior credit facility would be substantially similar to the collateral, guarantees and financial maintenance covenants for our current senior credit facility and that certain other covenants in the replacement
senior credit facility might be less restrictive than those contained in our current senior credit facility. The terms of a replacement senior credit facility have not been finalized. Accordingly, there can be no assurance that we will enter
into a replacement senior credit facility on the terms described above or otherwise.
S-6
The Offering
Issuer
|
Constellation Brands, Inc.
|
Subsidiary Guarantors
|
The notes will be guaranteed by our subsidiaries that are guarantors under our senior credit facility.
|
Securities Offered
|
$600,000,000 aggregate principal amount of 6% Senior Notes due 2022.
|
Maturity
|
The notes will mature on May 1, 2022.
|
Interest
|
Interest on the notes will accrue from April 17, 2012 and will be payable on May 1 and November 1 of each year, beginning November 1, 2012.
|
Ranking
|
The notes will be our senior unsecured obligations and will rank equally with all of our other senior unsecured indebtedness and will be effectively subordinated to the indebtedness outstanding
under our senior credit facility from time to time and any other secured debt we may incur to the extent of the value of the assets securing such debt. The notes will be fully and unconditionally guaranteed on a senior basis, jointly and severally,
by the subsidiaries that are guarantors under our senior credit facility, subject to release provisions described below. Each guarantee will be effectively subordinated to any secured obligations of the subsidiary guarantors to the extent of the
value of the assets securing such debt. The notes will also be structurally subordinated to all indebtedness and other liabilities of our subsidiaries that do not guarantee the notes.
|
|
At November 30, 2011, as adjusted to give effect to the offering of the notes and assuming the net proceeds from the sale of the notes are used to reduce outstanding
senior indebtedness, we had approximately (i) $3.1 billion aggregate principal amount of senior indebtedness outstanding, of which approximately $481.6 million was secured and (ii) $390.8 million of available undrawn revolving commitments under the
revolving portion of our senior credit facility. See Use of Proceeds. The guarantee of a subsidiary guarantor will be released to the extent such subsidiary guarantor is released as a guarantor under our senior credit facility or the
facility (or a successor thereto) is refinanced, extended, substituted, replaced or renewed without such subsidiary guarantor being a guarantor of the indebtedness thereunder, or if our senior credit facility is otherwise terminated or the
requirements for legal or covenant defeasance or to discharge the indenture have been met.
|
Optional Redemption
|
We may, at our option, redeem some or all of the notes at any time at a redemption price equal to the greater of
|
|
|
|
100% of the principal amount of the notes being redeemed; and
|
|
|
|
the sum of the present values of the remaining scheduled payments of principal and interest on the notes being redeemed (excluding interest accrued to
the redemption date) from the redemption date to the maturity date discounted to the date of redemption on a semi-annual basis (assuming a
|
S-7
|
360-day year consisting of twelve 30-day months) at a discount rate equal to the Treasury Rate (as defined in this prospectus supplement) plus 50 basis points.
|
|
We will also pay the accrued and unpaid interest on the notes to the redemption date.
|
Repurchase at the Option of Holders Upon A Change of Control
|
If we experience a change of control (as defined in this prospectus supplement), we may be required to offer to purchase the notes at a purchase price equal to 101% of the principal
amount, plus accrued and unpaid interest. We might not be able to pay you the required price for notes you present to us at the time of a change of control because our senior credit facility or other indebtedness may prohibit payment or we might not
have enough funds at that time.
|
Covenants
|
The indenture under which we will issue the notes contains covenants that, among other things, limit our ability under certain circumstances to create liens, enter into sale-leaseback
transactions and engage in mergers, consolidations and sales of all or substantially all of our assets. See Description of the Notes and the Guarantees in this prospectus supplement.
|
Use of Proceeds
|
We intend to use the net proceeds of the offering of the notes for general corporate purposes, which purposes might include, among others, reducing indebtedness under the term loan portion of
our senior credit facility, acquisitions of complementary assets or businesses, or common stock share repurchases. Pending any such uses we will invest the proceeds in short-term, interest-bearing instruments. See Use of Proceeds.
|
Risk Factors
|
An investment in the notes involves a high degree of risk. Potential investors should carefully consider the risk factors set forth under the heading Risk Factors and in the
documents incorporated by reference herein prior to making a decision to invest in the notes.
|
S-8
RISK FACTORS
You should carefully consider the risks described below and in our documents filed with the SEC and incorporated by reference herein, as
well as other information included in this prospectus supplement, the accompanying prospectus and the documents incorporated by reference in this prospectus supplement and the accompanying prospectus before buying any of the notes.
Risks Relating to The Company
You should carefully consider the risks factors and other cautionary statements included in our annual report on Form 10-K for the fiscal year ended February 28, 2011 and in other documents filed
with the SEC and incorporated by reference herein.
Risks Relating to The Notes
The notes are unsecured and will be effectively subordinated to our secured debt to the extent of the value of the assets securing such debt.
The notes will not be secured by any of our assets. As of November 30, 2011, as adjusted to give effect to the
issuance of the notes and assuming the net proceeds from the sale of the notes are used to reduce outstanding senior indebtedness, we had approximately $481.6 million of secured debt and approximately $390.8 million of unused commitments (taking
into account issued and outstanding revolving letters of credit of approximately $12.2 million) under our revolving credit facility. Our obligations under our senior credit facility are currently secured by (i) first priority pledges of 100% of
the ownership interests of certain of our U.S. subsidiaries and (ii) first priority pledges of 65% of the voting ownership interests held by us of certain of our foreign subsidiaries. In addition, the indenture governing the notes will permit
us and our subsidiaries to incur certain additional debt that is secured by liens on our assets without equally and ratably securing the notes. If the Company becomes insolvent or is liquidated, or if payment under our secured debt is accelerated,
the holders of our secured debt would be entitled to exercise the remedies available to a secured lender under applicable law and pursuant to the agreement governing such debt. In any such event, because the notes will not be secured by any of our
assets, it is possible that there would be no assets remaining from which claims of the holders of the notes could be satisfied following repayment of our secured debt or, if any such assets remained, such assets might be insufficient to satisfy
such claims fully.
Our ability to make payments on the notes depends on our ability to receive dividends from our subsidiaries, and not
all of our subsidiaries are guarantors of the notes. The notes will be structurally subordinated to all indebtedness and other liabilities of our subsidiaries that do not guarantee the notes.
We are a holding company and conduct almost all of our operations through our subsidiaries. As of November 30, 2011, approximately
82% of our tangible assets were held by our subsidiaries. The ownership interests of our subsidiaries represent substantially all the assets of the holding company. Accordingly, we are dependent on the cash flows of our subsidiaries to meet our
obligations, including the payment of the principal and interest on the notes. See Description of the Notes and the Guarantees.
The notes will be guaranteed, jointly and severally, by our subsidiaries that guarantee our senior credit facility. Holders of the notes will not have a direct claim on assets of subsidiaries that do not
guarantee the notes and the notes will be structurally subordinated to all indebtedness and liabilities of our subsidiaries that do not guarantee the notes. For the nine months ended November 30, 2011, approximately $429.8 million of our net
sales were from our subsidiaries that are not guarantors of the notes. As of November 30, 2011, our non-guarantor subsidiaries had approximately $421.3 million of liabilities.
The subsidiary guarantees may be subject to challenge under fraudulent transfer laws.
Under U.S. bankruptcy law and comparable provisions of state fraudulent transfer laws, a court could subordinate or void any guarantee if it found that the guarantee was incurred with actual intent to
hinder, delay or
S-9
defraud creditors or the guarantor did not receive fair consideration or reasonably equivalent value for the guarantee and the guarantor was any of the following: (i) insolvent or was
rendered insolvent because of the guarantee; (ii) engaged in a business or transaction for which its remaining assets constituted unreasonably small capital; or (iii) intending to incur, or believed that it would incur, debts beyond its
ability to pay at maturity. To the extent any guarantee were to be voided as a fraudulent conveyance or held unenforceable for any other reason, holders of the notes would cease to have any claim in respect of such guarantor and would be solely our
creditors and any guarantor whose guarantee was not voided or held unenforceable. In such event, the claims of the holders of the notes against the issuer of an invalid guarantee would be subject to the prior payment of all liabilities of such
guarantor. There can be no assurance that, after providing for all prior claims, there would be sufficient assets to satisfy the claims of the holders of the notes relating to any voided guarantee.
There is no public market for the notes, an active trading market for the notes may not develop and the market price of the notes may be lower than
the offering price.
The notes will constitute a new issue of securities with no established trading market, and there
can be no assurance as to (i) the liquidity of any such market that may develop, (ii) the ability of holders of notes to sell their notes or (iii) the price at which the holders of notes would be able to sell their notes. If such a
market were to exist, the notes could trade at prices that may be higher or lower than their principal amount or purchase price, depending on many factors, including prevailing interest rates, the market for similar notes and our financial
performance. We have been advised by the underwriters that, following completion of this offering, the underwriters presently intend to make a market in the notes. However, the underwriters are not obligated to do so, and any market-making activity
with respect to the notes may be discontinued at any time without notice. In addition, such market-making activity will be subject to the limits imposed by the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended.
There can be no assurance that an active trading market will exist for the notes.
The subsidiary guarantees may be limited in duration.
Each subsidiary guarantor will guarantee our obligations under the notes only for so long as each subsidiary guarantor
is a guarantor under our senior credit facility. If any or all of the subsidiary guarantees are released or terminated or no longer required under our senior credit facility, such subsidiary guarantee(s) will be released under the indenture. The
indenture does not contain any covenants that materially restrict our ability to sell, transfer or otherwise dispose of our assets, including the ownership interests of our subsidiaries, or the assets of any of our subsidiaries, except as described
under the caption Description of Debt SecuritiesConsolidation, Merger, Sale or Conveyance in the accompanying prospectus.
We may not be able to repurchase the notes upon a change of control.
Upon the occurrence of specific kinds of change of control events, each holder of notes will have the right to require us to repurchase
all or any part of such holders notes at a price equal to 101% of their principal amount, plus accrued and unpaid interest, if any, to the date of purchase. Our senior credit facility currently also provides that certain change of control
events constitute a default. Any future credit agreement or other agreements relating to indebtedness to which we become a party may contain similar provisions. If we experience a change of control that triggers a default under our senior credit
facility, such default could result in amounts outstanding under our senior credit facility being declared due and payable. We would be prohibited from purchasing the notes unless, and until, such time as our indebtedness under our senior credit
facility was repaid in full. There can be no assurance that either we or our subsidiary guarantors would have sufficient financial resources available to satisfy all of our or their obligations under our senior credit facility and these notes in the
event of a change of control. Our failure to purchase the notes as required under the indenture governing the notes would result in a default under the indenture, which could have material adverse consequences for us and the holders of the notes.
See Description of the Notes and the GuaranteesRepurchase at the Option of Holders Upon a Change of Control.
S-10
USE OF PROCEEDS
We estimate that the net proceeds from the sale of the notes will be approximately $592.0 million (after deducting underwriter discounts
and commissions and estimated offering expenses), which will be used for general corporate purposes, which purposes might include, among others, reducing indebtedness under the term loan portion of our senior credit facility, acquisitions of
complementary assets or businesses or common stock share repurchases. Pending any such uses we will invest the proceeds in short-term, interest-bearing instruments. At March 31, 2012, the weighted average interest rate of our borrowings under
our senior credit facility was approximately 2.28% and the weighted average maturity was approximately 1.6 years. Borrowings under our senior credit facility are used for working capital, acquisitions and general corporate purposes. Affiliates of
certain of the underwriters are currently lenders under our senior credit facility, borrowings under which may be reduced with the net proceeds of the offering, as indicated above.
S-11
CAPITALIZATION
The following table sets forth, as of November 30, 2011, our consolidated cash and cash equivalents and total capitalization on
(i) an actual basis and (ii) as adjusted to give effect to the issuance of the notes, and assuming we use the net proceeds from the sale of the notes to reduce indebtedness outstanding under the term loan portion of our senior credit
facility, although we may instead use the proceeds for other general corporate purposes. See Use of Proceeds. You should read this table in conjunction with our consolidated financial statements and the related notes which are
incorporated by reference in this prospectus supplement and the accompanying prospectus.
|
|
|
|
|
|
|
|
|
|
|
November 30, 2011
|
|
|
|
Actual
|
|
|
As Adjusted For
the
Notes Issuance
|
|
(in millions)
|
|
(Unaudited)
|
|
Cash and Cash Equivalents
(a)
|
|
$
|
55.8
|
|
|
$
|
55.8
|
|
|
|
|
|
|
|
|
|
|
Long-Term Debt (including current portion):
|
|
|
|
|
|
|
|
|
Revolving Credit Facility
(b)
|
|
$
|
247.0
|
|
|
$
|
247.0
|
|
Term Loan B
|
|
|
826.6
|
|
|
|
234.6
|
|
Other Senior Debt
|
|
|
136.5
|
|
|
|
136.5
|
|
6.000% Senior Notes due 2022 offered hereby
|
|
|
|
|
|
|
600.0
|
|
8.375% Senior Notes due 2014
(c)
|
|
|
498.4
|
|
|
|
498.4
|
|
7.250% Senior Notes due 2016
(d)
|
|
|
696.1
|
|
|
|
696.1
|
|
7.250% Senior Notes due 2017
|
|
|
700.0
|
|
|
|
700.0
|
|
|
|
|
|
|
|
|
|
|
Total Debt
|
|
|
3,104.6
|
|
|
|
3,112.6
|
|
|
|
|
|
|
|
|
|
|
Stockholders Equity
|
|
|
2,638.0
|
|
|
|
2,638.0
|
|
|
|
|
|
|
|
|
|
|
Total Capitalization
|
|
$
|
5,742.6
|
|
|
$
|
5,750.6
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
Cash and Cash Equivalents totaled $85.8 million as of February 29, 2012.
|
(b)
|
|
Amounts outstanding under the Revolving Credit Facility were $173.1 million as of March 31, 2012.
|
(c)
|
|
Represents $500.0 million less $1.6 million unamortized discount.
|
(d)
|
|
Represents $700.0 million less $3.9 million unamortized discount.
|
S-12
DESCRIPTION OF THE NOTES AND THE GUARANTEES
The following discussion of the terms of the notes supplements the description of the general terms and provisions of the debt securities
contained in the accompanying prospectus and identifies any general terms and provisions described in the accompanying prospectus that will not apply to the notes.
Unless the context requires otherwise, references in this section to we, us, our and the Company refer to Constellation Brands, Inc. only and not to its
subsidiaries. Unless otherwise defined herein, capitalized terms used in the description below have the definitions given to them under Certain Definitions below.
General
The notes will be issued under an indenture and supplemental
indenture thereto, together referred to below as the indenture, among us, Manufacturers and Traders Trust Company, and the guarantors named therein. You should read the accompanying prospectus for a general discussion of the terms and provisions of
the indenture.
The indenture does not limit the amount of notes, debentures or other evidences of indebtedness that we may
issue thereunder and provides that notes, debentures or other evidences of indebtedness may be issued from time to time thereunder in one or more series. We are initially offering the notes in the principal amount of $600,000,000. We may, without
the consent of the holders, issue additional notes (which are referred to as such below) and thereby increase that principal amount in the future, on the same terms and conditions and with the same CUSIP number as the notes we offer by this
prospectus supplement.
The notes will mature on May 1, 2022 and will bear interest at a rate of 6% per year. Interest on the
notes will accrue from April 17, 2012 or from the most recent interest payment date to which interest has been paid or duly provided for. We will pay interest on the notes semi-annually on May 1 and November 1 of each year, beginning November 1,
2012. In each case, we:
|
|
|
will pay interest to the person in whose name a note is registered at the close of business on April 15 or October 15 preceding the interest payment
date;
|
|
|
|
will compute interest on the basis of a 360-day year consisting of twelve 30-day months;
|
|
|
|
will make payments on the notes at the offices of the trustee; and
|
|
|
|
may make payments by wire transfer for notes held in book-entry form or by check mailed to the address of the person entitled to the payment as it
appears in the note register.
|
If any interest payment date or maturity or redemption date falls on a day
that is not a business day, the required payment shall be made on the next business day as if it were made on the date such payment was due and no interest shall accrue on the amount so payable from and after such interest payment date or maturity
or redemption date, as the case may be, to such next business day. Business day means any day that is not a day on which banking institutions in The City of New York are authorized or required by law or by executive order issued by a
governmental authority or agency regulating such banking institutions, to close.
We will issue the notes only in fully
registered form, without coupons, in denominations of $2,000 and any integral multiple of $1,000 in excess thereof.
Subsidiary Guarantees
Our obligations under the indenture and the notes, including the payment of principal of, and premium, if any, and
interest on, the notes, will be fully and unconditionally guaranteed by the subsidiaries that are guarantors under our senior credit facility, provided that the guarantee of a subsidiary guarantor will be released to the extent such subsidiary
guarantor is released as a guarantor under our senior credit facility or the facility (or a successor thereto) is refinanced, extended, substituted, replaced or renewed without such subsidiary guarantor being a guarantor of the indebtedness
thereunder, or if our senior credit facility is otherwise terminated or the requirements for legal or covenant defeasance or to discharge the indenture have been met.
S-13
The subsidiary guarantors guarantees will be joint and several obligations.
The guarantees will be senior unsecured obligations of each subsidiary guarantor and will rank equally with all of the other
senior unsecured obligations of the subsidiary guarantor. Each guarantee will be effectively subordinated to any secured obligations of the subsidiary guarantors. The obligations of each subsidiary guarantor under its guarantee will provide that it
be limited as necessary to prevent that guarantee from constituting a fraudulent conveyance under applicable law.
If a
guarantee were rendered voidable, it could be subordinated by a court to all other liabilities and obligations (including guarantees and other contingent liabilities) of the applicable subsidiary guarantor, and depending on the amount of such
liabilities and obligations, a subsidiary guarantors liability on its guarantee could be reduced to zero.
The indenture
will not contain any restrictions on the ability of any subsidiary guarantor to (i) pay dividends or distributions on, or redeem, purchase, acquire, or make a liquidation payment with respect to, any of that subsidiary guarantors
ownership interests, (ii) make any payment of principal, premium, if any, or interest on or repay, repurchase or redeem any debt securities of that subsidiary guarantor or (iii) consolidate with, merge with or into, or transfer all or
substantially all of its assets to another person or entity. If a subsidiary guarantor is merged or consolidated with or into another person that is the surviving company in that merger or consolidation and (a) the surviving company becomes a
guarantor under our senior credit facility, then the indenture will require that the surviving company expressly assume the obligations of the subsidiary guarantor under its guarantee or (b) the surviving company is not a guarantor under our
senior credit facility and we deliver an officers certificate to the trustee to that effect, then the surviving company will be released from any obligations under the guarantee of the subsidiary which was so merged or consolidated.
Ranking
The
notes will be our senior unsecured obligations and will rank equally with all of our other senior unsecured indebtedness and will be effectively subordinated to the indebtedness outstanding under our senior credit facility from time to time and any
other secured debt we may incur. The notes will be fully and unconditionally guaranteed on a senior basis, jointly and severally, by the subsidiaries that are guarantors under our senior credit facility, subject to the release provisions described
above. Each guarantee will be effectively subordinated to any secured obligations of the subsidiary guarantors to the extent of the value of the assets securing such debt. These subsidiary guarantors also guarantee our obligations under our senior
credit facility. Our senior credit facility is currently secured by a pledge of the ownership interests of certain of our subsidiaries and by certain intercompany debt subject to certain tax exclusions. The notes will also be structurally
subordinated to all indebtedness and other liabilities of our subsidiaries that do not guarantee the notes.
We are a holding
company and conduct almost all of our operations through our subsidiaries. Consequently, our ability to pay our obligations, including our obligation to pay interest on the notes and to repay the principal amount of the notes at maturity, upon
redemption, upon acceleration or otherwise will depend upon our subsidiaries earnings and advances or loans made by them to us (and potentially dividends or distributions made by them to us). Our subsidiaries are separate and distinct legal
entities and, except for the subsidiary guarantors obligations under the subsidiary guarantees, have no obligation, contingent or otherwise, to pay any amounts due on the notes or to make funds available to us to do so. Our subsidiaries
ability to make advances or loans to us or to pay dividends or make other distributions to us will depend upon their operating results and will be subject to applicable laws and contractual restrictions, if any. The indenture will not limit our
subsidiaries ability to enter into other agreements that prohibit or restrict dividends or other payments or advances to us. Except with respect to the covenants described below under Limitation upon Liens and
Limitation on Sale and Leaseback Transactions, the indenture does not restrict or limit the ability of any subsidiary to incur, create, assume or guarantee indebtedness or encumber its assets or properties. At November 30,
2011, as adjusted to give effect to the offering of the notes and assuming the net proceeds from the sale of the notes are used to reduce outstanding senior indebtedness, we had approximately (i) $3.1 billion aggregate principal amount of
senior indebtedness
S-14
outstanding, of which approximately $481.6 million was secured and (ii) $390.8 million of unused commitments (taking into account issued and outstanding revolving letters of credit of
approximately $12.2 million) under our revolving credit facility.
Optional Redemption
We may redeem the notes in whole or in part at any time or in part from time to time, at our option, at a redemption price equal to the
greater of
|
|
|
100% of the principal amount of the notes to be redeemed; and
|
|
|
|
the sum of the present values of the remaining scheduled payments of principal and interest (excluding interest accrued to the redemption date) on the
notes discounted to the date of redemption on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the applicable Treasury Rate plus 50 basis points,
|
plus, in each case, accrued and unpaid interest on the principal amount being redeemed to the redemption date.
Treasury Rate
means, with respect to any redemption date, (1) the yield, under the heading which represents the
average for the immediately preceding week, appearing in the most recently published statistical release designated H.15(519) or any successor publication which is published weekly by the Board of Governors of the Federal Reserve System
and which establishes yields on actively traded United States Treasury securities adjusted to constant maturity under the caption Treasury Constant Maturities, for the maturity corresponding to the Comparable Treasury Issue (if no
maturity is within three months before or after the remaining life, yields for the two published maturities most closely corresponding to the Comparable Treasury Issue will be determined and the Treasury Rate will be interpolated or extrapolated
from such yields on a straight line basis, rounding to the nearest month) or (2) if such release (or any successor release) is not published during the week preceding the calculation date or does not contain such yields, the rate per year equal
to the semi-annual equivalent yield-to-maturity of the Comparable Treasury Issue, calculated using a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such
redemption date. The Treasury Rate will be calculated on the third Business Day preceding the redemption date.
Comparable Treasury Issue
means the United States Treasury security selected by an Independent Investment Banker as
having a maturity comparable to the remaining term of the notes to be redeemed.
Comparable Treasury Price
means (1) the average of four Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest Reference Treasury Dealer Quotations, or (2) if the Independent Investment Banker obtains fewer than four
such Reference Treasury Dealer Quotations, the average of all such quotations.
Independent Investment
Banker
means any of Merrill Lynch, Pierce, Fenner & Smith Incorporated, J.P. Morgan Securities LLC, Rabo Securities USA, Inc., or Barclays Capital Inc., and their successors, or, if Merrill Lynch, Pierce, Fenner & Smith
Incorporated, J.P. Morgan Securities LLC, Rabo Securities USA, Inc., or Barclays Capital Inc. are unwilling or unable to select the Comparable Treasury Issue, an independent investment banking institution of national standing appointed by the
trustee after consultation with us.
Reference Treasury Dealer
means any of (1) Merrill Lynch, Pierce,
Fenner & Smith Incorporated, J.P. Morgan Securities LLC, Rabo Securities USA, Inc., or Barclays Capital Inc., or their successors;
provided, however
, that if Merrill Lynch, Pierce, Fenner & Smith Incorporated, J.P. Morgan
Securities LLC, Rabo Securities USA, Inc., or Barclays Capital Inc. shall cease to be a primary U.S. Government securities dealer in New York City, which we refer to as a Primary Treasury Dealer, we will substitute another Primary
Treasury Dealer and (2) any one other Primary Treasury Dealer selected by the Independent Investment Banker after consultation with us.
S-15
Reference Treasury Dealer Quotations
means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined by the Independent Investment Banker, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted
in writing to the Independent Investment Banker at 5:00 p.m., New York City time, on the third Business Day preceding such redemption date.
Holders of notes to be redeemed will be sent a redemption notice by first-class mail at least 30 and not more than 60 days before the date fixed for redemption. If fewer than all of the notes are to be
redeemed, the trustee will select, not more than 60 days and not less than 30 days before the redemption date, the particular notes or portions of the notes for redemption from the outstanding notes not previously called by lot. Unless we default in
payment of the redemption price, on and after the redemption date, interest will cease to accrue on the notes or portions of the notes called for redemption.
Repurchase at the Option of Holders Upon a Change of Control
Upon the
occurrence of a Change of Control, each holder of notes will have the right to require us to repurchase all or any part of such holders notes (except that no note will be purchased in part if the remaining principal amount of such note would
be less than $2,000) pursuant to the offer described below (the
Change of Control Offer
) at a purchase price (the
Change of Control Purchase Price
) equal to 101% of the principal amount of the notes to be
repurchased, plus accrued and unpaid interest to, but excluding, the repurchase date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date).
Within 30 days following any Change of Control, we will:
(a) cause a notice of the Change of Control Offer to be sent at least once to the Dow Jones News Service or similar
business news service in the United States; and
(b) send, by first-class mail, with a copy to the trustee, to
each holder of notes, at such holders address appearing in the security register, a notice stating:
(1)
that a Change of Control has occurred and a Change of Control Offer is being made pursuant to the covenant entitled Repurchase at the Option of Holders Upon a Change of Control and that all notes timely tendered will be accepted for
payment;
(2) the Change of Control Purchase Price and the repurchase date, which will be, subject to any
contrary requirements of applicable law, a business day no earlier than 30 days nor later than 60 days from the date the notice is mailed;
(3) the circumstances and relevant facts regarding the Change of Control (including information with respect to our
pro forma
consolidated historical income, cash flow and capitalization after
giving effect to the Change of Control); and
(4) the procedures that holders of notes must follow in order to
tender their notes (or portions thereof) for payment, and the procedures that holders of notes must follow in order to withdraw an election to tender notes (or portions thereof) for payment.
We will not be required to make a Change of Control Offer following a Change of Control if a third party makes the Change of Control
Offer in the manner, at the times and otherwise in compliance with the requirements set forth in the indenture applicable to a Change of Control Offer made by us and purchases all notes validly tendered and not withdrawn under such Change of Control
Offer.
We will comply, to the extent applicable, with the requirements of Section 14(e) of the Securities Exchange Act
of 1934, as amended (the
Exchange Act
), and any other securities laws or regulations in connection with
S-16
the repurchase of Notes pursuant to a Change of Control Offer. To the extent that the provisions of any securities laws or regulations conflict with the provisions of this covenant, we will
comply with the applicable securities laws and regulations and will not be deemed to have breached our obligations under this covenant by virtue of this compliance.
We have no present intention to engage in a transaction involving a Change of Control, although it is possible that we would decide to do so in the future. We could, in the future, enter into certain
transactions, including acquisitions, refinancings or other recapitalizations, that would not constitute a Change of Control, but that could increase the amount of debt outstanding at such time or otherwise affect our capital structure or credit
ratings.
The definition of Change of Control includes a phrase relating to the sale, transfer, assignment, lease, conveyance
or other disposition of all or substantially all of our property. Although there is a developing body of case law interpreting the phrase substantially all, there is no precise established definition of the phrase under
applicable law. Accordingly, if we and our subsidiaries, considered as a whole, dispose of less than all of our property by any of the means described above, the ability of a holder of notes to require us to repurchase its notes may be uncertain. In
such a case, holders of the notes may not be able to resolve this uncertainty without resorting to legal action.
Sinking Fund
The notes will not have the benefit of any sinking fund.
Reports to the Trustee
We are required to provide the trustee with an
officers certificate each fiscal year stating that we reviewed our activities during the preceding fiscal year and that, after reasonable investigation and inquiry by the certifying officers, we are in compliance with the requirements of the
indenture and that no default exists or, if we know of a default, we must identify it.
Limitation Upon Liens
The indenture provides that, so long as any of the notes remain outstanding, we will not and will not permit any Subsidiary to issue,
assume or guarantee any Funded Debt that is secured by a mortgage, pledge, security interest or other lien or encumbrance (a
lien
) upon or with respect to any Principal Property or on the Capital Stock of any Subsidiary that owns
a Principal Property unless:
|
|
|
we secure the notes equally and ratably with (or prior to) any and all Funded Debt secured by that lien, or
|
|
|
|
in the case of Funded Debt other than Capital Markets Debt, immediately after giving effect to the granting of any such lien and the incurrence of any
Funded Debt in connection therewith, the Companys Consolidated Fixed Charge Coverage Ratio would be greater than 2.0 to 1.0.
|
The above limitation will not apply to some types of permitted liens. These permitted liens include:
|
|
|
liens existing as of the date of the issuance of the notes (excluding liens securing our senior credit facility);
|
|
|
|
liens securing our senior credit facility in an amount not to exceed the maximum amount permitted to be outstanding under our existing senior credit
facility (including the incremental facilities contemplated thereunder);
|
|
|
|
liens on property or assets of, or any shares of stock securing Funded Debt of, any corporation or other Person existing at the time such corporation
or other Person becomes a Subsidiary;
|
S-17
|
|
|
liens on property, assets or shares of stock securing Funded Debt existing at the time of an acquisition, including an acquisition through merger or
consolidation, and liens to secure Funded Debt incurred prior to, at the time of or within 180 days after the later of the completion of the acquisition, or the completion of the construction and commencement of the operation of any such property,
for the purpose of financing all or any part of the purchase price or construction cost of that property;
|
|
|
|
liens to secure specified types of development, operation, construction, alteration, repair or improvement costs;
|
|
|
|
liens in favor of, or which secure Funded Debt owing to, the Company or a Subsidiary;
|
|
|
|
liens in connection with government contracts, including the assignment of moneys due or to come due on those contracts;
|
|
|
|
certain types of liens in connection with legal proceedings;
|
|
|
|
certain types of liens arising in the ordinary course of business and not in connection with the borrowing of money such as mechanics,
materialmens, carriers or other similar liens;
|
|
|
|
liens on property securing obligations issued by a domestic governmental issuer to finance the cost of an acquisition or construction of that property;
and
|
|
|
|
extensions, substitutions, replacements, refinancings or renewals (or successive extensions, substitutions, replacements, refinancing or renewals), in
whole or in part, of the foregoing or of Funded Debt secured in reliance on the second bullet point under the first paragraph above, in each case, if the principal amount of the Funded Debt secured thereby is not increased and is not secured by any
additional assets.
|
Limitation on Sale and Leaseback Transactions
The indenture provides that, so long as any of the notes remain outstanding, neither we nor any Subsidiary may enter into any arrangement
with any Person (other than ourselves or any Subsidiary) where we or a Subsidiary agree to lease any Principal Property which has been or is to be sold or transferred more than 120 days after the later of (i) such Principal Property having been
acquired by us or a Subsidiary and (ii) completion of construction and commencement of full operation thereof, by us or a Subsidiary to that person (a
Sale and Leaseback Transaction
). Sale and Leaseback Transactions with
respect to facilities financed with specified tax exempt securities are excepted from the definition. This covenant does not apply to leases of a Principal Property for a term of less than three years.
This limitation also does not apply to any Sale and Leaseback Transaction if:
|
|
|
the net proceeds to the Company or a Subsidiary from the sale or transfer equal or exceed the fair value, as determined by our Board of Directors, of
the Principal Property so leased,
|
|
|
|
immediately after giving effect to such Sale and Leaseback Transaction, the Companys Consolidated Fixed Charge Coverage Ratio would be greater
than 2.0 to 1.0, or
|
|
|
|
we, within 120 days after the effective date of the Sale and Leaseback Transaction, apply an amount equal to the fair value as determined by the
Companys Board of Directors of the Principal Property so leased to:
|
|
|
|
the prepayment or retirement of our Funded Debt, which may include the notes; or
|
|
|
|
the acquisition of additional real property.
|
Events of Default
The events of default applicable to the notes will
consist of the following:
|
|
|
failure to pay the principal of, or premium, if any, on any of the notes when due and payable (whether at maturity, by call for redemption, by
declaration of acceleration or otherwise);
|
S-18
|
|
|
failure to make a payment of any interest on any note when due and payable, which failure shall have continued for a period of 30 days;
|
|
|
|
our, or any subsidiary guarantors, failure to perform or observe any other covenants or agreements in the indenture or in the notes which failure
shall have continued for a period of at least 90 days after written notice to us or the guarantors, as the case may be, by the trustee or to us and the trustee from the holders of not less than 25% of the aggregate principal amount of the then
outstanding notes
provided
, that, notwithstanding the foregoing, in no event shall an event of default with respect to any failure by us to comply with the reporting provisions of the indenture or any failure by us to comply with the
requirements of Section 314(a)(1) of the Trust Indenture Act (which relates to the provision of reports) be deemed to have occurred unless (x) such report is past due hereunder by at least 180 days and (y) such failure to comply has
not been cured or waived prior to the 90th day after written notice to us by the trustee or to us and the trustee from the holders of not less than 25% of the aggregate principal amount of the then outstanding notes;
|
|
|
|
failure to make any payment after the maturity of any indebtedness of ours with an aggregate principal amount in excess of $100.0 million or the
acceleration of indebtedness of ours with an aggregate principal amount in excess of $100.0 million as a result of a default with respect to such indebtedness, and such indebtedness, in either case, is not discharged or such acceleration is not
cured, waived, rescinded or annulled within a period of 30 days after we receive written notice;
|
|
|
|
certain events of bankruptcy, insolvency or reorganization of us; or
|
|
|
|
any guarantee of the notes of a subsidiary guarantor that is a significant subsidiary shall for any reason cease to be, or be asserted in writing by
any subsidiary guarantor thereof or us not to be, in full force and effect, and enforceable in accordance with its terms except as provided in the indenture.
|
Modification of the Indenture
The indenture contains provisions permitting
us, the subsidiary guarantors and the trustee to amend or supplement the indenture or the notes with the consent of the holders of a majority in principal amount of the notes then outstanding. If any additional notes are issued under the indenture,
such notes would constitute part of the same series of debt securities as the notes offered hereby and would be included in determining whether the holders of the requisite percentage of notes had provided any instruction or consented to
any amendment. However, any debt securities (other than additional notes) that may be issued under the indenture will not vote together with the notes and any additional notes that we issue. In any event, no amendment or supplement may, among other
things, (a) extend the final maturity of any note, or reduce the rate or extend the time of payment of any interest on any note, or reduce the principal amount of any note, premium on any note, or reduce any amount payable upon any redemption
of any note, or (b) reduce the percentage of principal amount of the notes that is required to approve an amendment or supplement to the indenture, without the consent of the holder of each note so affected.
Legal Defeasance
We may
be discharged from any and all obligations in respect of the notes (except for certain obligations to register the transfer or exchange of notes, to replace stolen, destroyed, lost or mutilated notes, to maintain paying agencies, to compensate and
indemnify the trustee and to furnish the trustee with the names and addresses of holders of notes), which we refer to as
defeasance
, if:
|
|
|
we irrevocably deposit with the trustee, in trust, cash and/or securities of the United States government, or securities of agencies of the United
States government backed by the full faith and credit of the United States government, in an amount certified by a nationally recognized firm of independent public accountants to be sufficient to pay the principal of and interest on the notes on the
applicable due dates for those payments in accordance with the terms of the notes;
|
S-19
|
|
|
we deliver to the trustee either (i) an opinion of counsel, based on a ruling of the United States Internal Revenue Service (unless there has been
a change in the applicable United States federal income tax law), to the effect that the holders of the notes will not recognize income, gain or loss for United States federal income tax purposes as a result of such defeasance and will be subject to
United States federal income tax on the same amounts and in the same manner and at the same times as would have been the case if the defeasance had not occurred or (ii) a ruling of the United States Internal Revenue Service directed to the
trustee to the same effect as set forth in clause (i) above;
|
|
|
|
immediately after giving effect to the deposit specified in the first bullet point, on a pro forma basis, no event of default with respect to the notes
shall have occurred and be continuing on the date of deposit or, with respect to defaults occurring upon certain events of bankruptcy, insolvency or reorganization relating to us, at any time during the period ending on the 91
st
day after the date of the deposit; and
|
|
|
|
we deliver to the trustee an officers certificate and an opinion of counsel each stating that we have complied with all of the above
requirements.
|
Defeasance of Certain Obligations
We may omit to comply with certain covenants with respect to the notes, and any such omission will not constitute an event of default with
respect to the notes, which we refer to as
covenant defeasance
, if:
|
|
|
we irrevocably deposit with the trustee, in trust, cash and/or securities of the United States government, or securities of agencies of the United
States government backed by the full faith and credit of the United States government, in an amount certified by a nationally recognized firm of independent public accountants to be sufficient to pay the principal of and interest on the notes on the
applicable due dates for those payments in accordance with the terms of the notes;
|
|
|
|
we deliver to the trustee an opinion of counsel to the effect that the holders of the notes will not recognize income, gain or loss for United States
federal income tax purposes as a result of such covenant defeasance and will be subject to United States federal income tax on the same amounts and in the same manner and at the same times as would have been the case if the covenant defeasance had
not occurred;
|
|
|
|
immediately after giving effect to the deposit specified in the first bullet point, on a pro forma basis, no event of default with respect to the notes
shall have occurred and be continuing on the date of the deposit or, with respect to defaults occurring upon certain events of bankruptcy, insolvency or reorganization relating to us, at any time during the period ending on the 91
st
day after the date of the deposit;
|
|
|
|
if the notes are then listed on a national securities exchange, we deliver to the trustee an opinion of counsel to the effect that the notes will not
be delisted as a result of such covenant defeasance; and
|
|
|
|
we deliver to the trustee an officers certificate and an opinion of counsel each stating that we have complied with all of the above
requirements.
|
If we exercise our option to effect a defeasance or covenant defeasance with respect to the
notes, as described above, and the trustee or paying agent is unable to apply any money or securities that we have deposited because of any legal proceeding or any order or judgment of any court or governmental authority, in each case our
obligations under the indenture and the notes will be revived and reinstated.
Certain Definitions
The terms set forth below are defined in the indenture as follows:
Board of Directors
means
our
Board of Directors or that or any of the subsidiary guarantors, as the case may be,
or any duly authorized committee of such Board of Directors.
Capital Lease Obligation
means any
obligations of us and our Subsidiaries on a Consolidated basis under any capital lease of real or personal property which, in accordance with GAAP, has been recorded as a capitalized lease obligation.
S-20
Capital Markets Debt
means any debt securities or debt financing issued
pursuant to an indenture, notes purchase agreement or similar financing arrangement (but excluding any credit agreement) whether offered pursuant to a registration statement under the Securities Act or under an exemption from the registration
requirements of the Securities Act.
Capital Stock
means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated, whether voting or non-voting) in the equity of such Person, including, without limitation, all common stock and preferred stock.
Change of Control
means the occurrence of any of the following events: (i) any
person or group (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than Permitted Holders, is or becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange
Act, except that a Person shall be deemed to have beneficial ownership of all shares that such Person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than
35% of the voting power of our total outstanding Voting Stock voting as one class, provided that the Permitted Holders beneficially own (as so defined) a percentage of Voting Stock having a lesser percentage of the voting power than such
other Person and do not have the right or ability by voting power, contract or otherwise to elect or designate for election a majority of our Board of Directors; (ii) during any period of two consecutive years, individuals who at the beginning
of such period constituted our Board of Directors (together with any new directors whose election to such Board or whose nomination for election by the shareholders was approved by a vote of 66
2
/
3
% of the directors then still in office who were either directors at
the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of such Board of Directors then in office; (iii) we consolidate with or merge with or into any
Person or convey, transfer or lease all or substantially all of our assets to any Person, or any corporation consolidates with or merges into or with us, in any such event pursuant to a transaction in which our outstanding Voting Stock is changed
into or exchanged for cash, securities or other property, other than any such transaction where our outstanding Voting Stock is not changed or exchanged at all (except to the extent necessary to reflect a change in our jurisdiction of incorporation)
or where (A) our outstanding Voting Stock is changed into or exchanged for (x) Voting Stock of the surviving corporation or (y) cash, securities and other property (other than Capital Stock of the surviving corporation) and
(B) no person or group other than Permitted Holders owns immediately after such transaction, directly or indirectly, more than the greater of (1) 35% of the voting power of the total outstanding Voting Stock of the
surviving corporation voting as one class and (2) the percentage of such voting power of the surviving corporation held, directly or indirectly, by Permitted Holders immediately after such transaction; or (iv) we are liquidated or
dissolved or adopt a plan of liquidation or dissolution other than in a transaction which complies with the provisions described under Consolidation, Merger, Sale or Conveyance.
Consolidated Fixed Charge Coverage Ratio
of us means, for any period, the ratio of (a) the sum of Consolidated
Net Income (Loss), Consolidated Interest Expense, Consolidated Income Tax Expense and Consolidated Non-cash Charges deducted in computing Consolidated Net Income (Loss) in each case, for such period, of us and our Subsidiaries on a Consolidated
basis, all determined in accordance with GAAP and on a pro forma basis for any acquisition or disposition of a Subsidiary or line of business following the first day of such period and on or prior to the date of determination as if all such
acquisitions and dispositions had occurred on the first day of such period to (b) the sum of Consolidated Interest Expense for such period and cash dividends paid on any of our preferred stock and that of our Subsidiaries during such period;
provided that (i) in making such computation, the Consolidated Interest Expense attributable to interest on any Funded Debt shall be computed on a pro forma basis for any incurrence or repayment of Funded Debt (other than Funded Debt under a
revolving credit facility) following the first day of the applicable period and on or prior to the date of determination as if such incurrence or repayment had occurred on the first day of such period and Funded Debt (A) bearing a floating
interest rate, shall be computed as if the rate in effect on the date of computation had been the applicable rate for the entire period and (B) which was not outstanding during the period for which the computation is being made but which bears,
at our option, a fixed or floating rate of interest, shall be computed by applying at our option, either the fixed or floating rate and (ii) in making such computation, the Consolidated Interest Expense of
S-21
the Company attributable to interest on any Funded Debt under a revolving credit facility computed on a pro forma basis shall be computed based upon the average daily balance of such Funded Debt
during the applicable period.
Consolidated Income Tax Expense
means for any period, as applied to us, the
provision for federal, state, local and foreign income taxes of us and our Subsidiaries for such period as determined in accordance with GAAP on a Consolidated basis.
Consolidated Interest Expense
of us means, without duplication, for any period, the sum of (a) our interest expense and that of our Subsidiaries for such period, on a Consolidated
basis, including, without limitation, (i) amortization of debt discount, (ii) the net cost under interest rate contracts (including amortization of discounts), (iii) the interest portion of any deferred payment obligation and
(iv) accrued interest, plus (b) (i) the interest component of the Capital Lease Obligations paid, accrued and/or scheduled to be paid or accrued by us and our Subsidiaries during such period and (ii) all our capitalized interest
and that of our Subsidiaries, in each case as determined in accordance with GAAP on a Consolidated basis. Whenever pro forma effect is to be given to an acquisition or disposition of assets for the purpose of calculating the Consolidated Fixed
Charge Coverage Ratio, the amount of Consolidated Interest Expense associated with any Funded Debt incurred in connection with such acquisition or disposition of assets shall be calculated on a pro forma basis in accordance with Regulation S-X under
the Securities Act, as in effect on the date of such calculation.
Consolidated Net Income (Loss)
of us
means, for any period, the Consolidated net income (or loss) of us and our Subsidiaries for such period as determined in accordance with GAAP on a Consolidated basis, adjusted, to the extent included in calculating such net income (loss), by
excluding, without duplication: (i) all extraordinary gains or losses (less all fees and expenses relating thereto); (ii) the portion of net income (or loss) of us and our Subsidiaries allocable to minority interests in unconsolidated
Persons to the extent that cash dividends or distributions have not actually been received by us or one of our Subsidiaries; (iii) any gain or loss, net of taxes, realized upon the termination of any employee pension benefit plan; (iv) net
gains (but not losses) (less all fees and expenses relating thereto) in respect of dispositions of assets other than in the ordinary course of business; or (v) the net income of any Subsidiary to the extent that the declaration of dividends or
similar distributions by that Subsidiary of that income is not at the time permitted, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulations
applicable to that Subsidiary or its stockholders. Whenever pro forma effect is to be given to an acquisition or disposition of assets for the purpose of calculating the Consolidated Fixed Charge Coverage Ratio, the amount of income or earnings
related to such assets shall be calculated on a pro forma basis in accordance with Regulation S-X under the Securities Act, as in effect on the date of such calculation.
Consolidated Net Tangible Assets
means the aggregate amount of assets, reduced by applicable reserves and other properly deductible items, after deducting
|
|
|
all current liabilities, excluding the current portion of any Funded Debt and any other current liabilities constituting Funded Debt because it is
extendible or renewable, and
|
|
|
|
all goodwill, trade names, trademarks, patents, unamortized debt discount and expense and other similar intangibles,
|
all as set forth on our books and records and those of our Subsidiaries and computed in accordance with GAAP.
Consolidated Non-cash Charges
of us means, for any period, the aggregate depreciation, amortization and other non-cash
charges of us and our Subsidiaries for such period, as determined in accordance with GAAP on a Consolidated basis (excluding any non-cash charge which requires an accrual or reserve for cash charges for any future period).
Consolidation
means, with respect to any Person, the consolidation of the accounts of such Person and each of its
subsidiaries if and to the extent the accounts of such Person and each of its Subsidiaries would normally be consolidated with those of such Person, all in accordance with GAAP. The term Consolidated shall have a similar meaning.
S-22
Funded Debt
means all indebtedness for the repayment of money borrowed,
whether or not evidenced by a bond, debenture, note or similar instrument or agreement, having a final maturity of more than 12 months after the date of its creation or having a final maturity of less than 12 months after the date of its creation
but by its terms being renewable or extendible beyond 12 months after such date at the option of the borrower. When determining Funded Debt, indebtedness will not be included if, on or prior to the final maturity of that indebtedness, we
have deposited the necessary funds for the payment, redemption or satisfaction of that indebtedness in trust with the proper depositary.
GAAP
means generally accepted accounting principles in the United States, consistently applied, which are in effect on the date of the issuance of the notes. At any time after the date
of issuance of the notes, we may elect to apply International Financial Reporting Standards (IFRS) accounting principles, consistently applied, as in effect at the time of such election, in lieu of GAAP and, from and after any such
election, references herein to GAAP shall thereafter be construed to mean IFRS; provided that any such election, once made, shall be irrevocable; provided, further that any calculation or determination under the indenture that requires the
application of GAAP for periods that include fiscal quarters ended prior to our election to apply IFRS shall remain as previously calculated or determined in accordance with GAAP. We must give notice of any election made in accordance with this
definition to the Trustee and the holders of notes.
Permitted Holders
means (a) Marilyn Sands, her
descendants (whether by blood or adoption), her descendants spouses, her siblings, the descendants of her siblings (whether by blood or adoption), Hudson Ansley, Lindsay Caleo, William Caleo, Courtney Winslow, or Andrew Stern, or the estate of
any of the foregoing Persons, or The Sands Family Foundation, Inc., (b) trusts which are for the benefit of any combination of the Persons described in clause (a), or any trust for the benefit of any such trust, or (c) partnerships,
limited liability companies or any other entities which are controlled by any combination of the Persons described in clause (a), the estate of any such Persons, a trust referred to in the foregoing clause (b), or an entity that satisfies the
conditions of this clause (c).
Person
means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust, unincorporated organization, any other company or entity or government or any agency or political subdivision thereof.
Principal Property
means, as of any date, any building, structure or other facility, together with the land upon which
it is erected and any fixtures which are a part of the building, structure or other facility, used primarily for manufacturing, processing or production, in each case located in the United States, and owned or leased or to be owned or leased by us
or any Subsidiary, and in each case the net book value of which as of that date exceeds 2% of our Consolidated Net Tangible Assets as shown on the consolidated balance sheet contained in our latest filing with the Securities and Exchange Commission,
other than any such land, building, structure or other facility or portion thereof which is a pollution control facility, or which, in the opinion of our Board of Directors, is not of material importance to the total business conducted by the us and
our Subsidiaries, considered as one enterprise.
Property
means any asset, revenue or any other property,
whether tangible or intangible, real or personal, including, without limitation, any right to receive income.
Securities Act
means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
Subsidiary
means any Person a majority of the equity ownership or the Voting Stock of which is at the time
owned, directly or indirectly, by us or by one or more other Subsidiaries, or by us and one or more other Subsidiaries.
Voting Stock
means, with respect to any Person, Capital Stock of any class or kind the holders of which are
ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of such Person, even if the right so to vote has been suspended by the happening of such a contingency.
S-23
Global Notes; Book-Entry System
Global Notes
The notes will be issued initially in book-entry form and will be represented by one or more global notes in fully registered form without interest coupons which will be deposited with the trustee as
custodian for The Depository Trust Company, which we refer to as DTC, and registered in the name of Cede & Co. (DTCs partnership nominee) or such other name as may be requested by an authorized representative of DTC. If,
however, the aggregate principal amount of any issue exceeds $500 million, one certificate will be issued with respect to each $500 million of principal amount, and an additional certificate will be issued with respect to any remaining principal
amount of such issue. The deposit of Securities with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual beneficial owners of
the securities; DTCs records reflect only the identity of the direct participants to whose accounts such securities are credited, which may or may not be the beneficial owners. Direct and indirect participants will remain responsible for
keeping account of their holdings on behalf of their customers. Except as set forth below, the global notes may be transferred, in whole and not in part, only to DTC or another nominee of DTC or to a successor of DTC or its nominee. Beneficial
interests in the global notes may not be exchanged for certificated notes except in the limited circumstances described below.
All interests in the global notes will be subject to the rules and procedures of DTC.
Certain Book-Entry Procedures for the Global Notes
The descriptions of the operations and procedures of DTC set forth below are provided solely as a matter of convenience. These operations and procedures are solely within the control of DTC and are
subject to change by DTC from time to time. Neither we nor the underwriters takes any responsibility for these operations or procedures, and investors are urged to contact DTC or its participants directly to discuss these matters.
DTC has advised us that it is:
|
|
|
a limited-purpose trust company organized under the laws of the State of New York;
|
|
|
|
a banking organization within the meaning of the New York Banking Law;
|
|
|
|
a member of the Federal Reserve System;
|
|
|
|
a clearing corporation within the meaning of the New York Uniform Commercial Code, as amended; and
|
|
|
|
a clearing agency registered pursuant to Section 17A of the Exchange Act.
|
DTC was created to hold securities for its participants and to facilitate the clearance and settlement of securities transactions between
participants through electronic book-entry changes to the accounts of its participants, thereby eliminating the need for physical transfer and delivery of securities certificates. DTCs participants include securities brokers and dealers
(including one or more of the underwriters), banks and trust companies, clearing corporations and certain other organizations. Indirect access to DTCs system is also available to other entities such as banks, brokers, dealers and trust
companies, which we refer to collectively as the indirect participants, that clear through or maintain a custodial relationship with a participant either directly or indirectly. Investors who are not participants may beneficially own
securities held by or on behalf of DTC only through participants or indirect participants. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (DTCC). DTCC is the holding company for DTC, National
Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S.
and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with participants or indirect participants.
S-24
We expect that, pursuant to procedures established by DTC:
|
|
|
upon deposit of each global note, DTC will credit, on its book-entry registration and transfer system, the accounts of participants designated by the
underwriters with an interest in the global note; and
|
|
|
|
ownership of beneficial interests in the global notes will be shown on, and the transfer of ownership of beneficial interests in the global notes will
be effected only through, records maintained by DTC (with respect to the interests of participants) and the participants and the indirect participants (with respect to the interests of persons other than participants).
|
The laws of some jurisdictions may require that some purchasers of securities take physical delivery of those securities in definitive
form. Accordingly, the ability to transfer beneficial interests in the notes represented by a global note to those persons may be limited. In addition, because DTC can act only on behalf of its participants, who in turn act on behalf of persons who
hold interests through participants, the ability of a person holding a beneficial interest in a global note to pledge or transfer that interest to persons or entities that do not participate in DTCs system, or to otherwise take actions in
respect of that interest, may be affected by the lack of a physical security in respect of that interest.
So long as DTC or
its nominee is the registered owner of a global note, DTC or that nominee, as the case may be, will be considered the sole legal owner or holder of the notes represented by that global note for all purposes of the notes and the indenture. Except as
provided below, owners of beneficial interests in a global note will not be entitled to have the notes represented by that global note registered in their names, will not receive or be entitled to receive physical delivery of certificated notes and
will not be considered the owners or holders of the notes represented by that beneficial interest under the indenture for any purpose, including with respect to the giving of any direction, instruction or approval to the trustee. Owners of
beneficial interests in a global note will not receive written confirmation from DTC of their purchase. Owners of beneficial interests in a global note are, however, expected to receive written confirmations providing details of the transaction, as
well as periodic statements of their holdings, from the direct or indirect participant through which the owner of beneficial interests in a global note entered into the transaction. Accordingly, each holder owning a beneficial interest in a global
note must rely on the procedures of DTC and, if that holder is not a participant or an indirect participant, on the procedures of the participant through which that holder owns its interest, to exercise any rights of a holder of notes under the
indenture or that global note. We understand that under existing industry practice, in the event that we request any action of holders of notes, or a holder that is an owner of a beneficial interest in a global note desires to take any action that
DTC, as the holder of that global note, is entitled to take, DTC would authorize the participants to take that action and the participants would authorize holders owning through those participants to take that action or would otherwise act upon the
instruction of those holders. Neither we nor the trustee will have any responsibility or liability for any aspect of the records relating to or payments made on account of notes by DTC or for maintaining, supervising or reviewing any records of DTC
relating to the notes.
Payments with respect to the principal of and interest on a global note will be payable by the trustee
to or at the direction of DTC or its nominee in its capacity as the registered holder of the global note under the indenture. Under the terms of the indenture, we and the trustee shall treat the persons in whose names the notes, including the global
notes, are registered as the owners thereof for the purpose of receiving payment thereon and for any and all other purposes whatsoever. Accordingly, neither we nor the trustee has or will have any responsibility or liability for the payment of those
amounts to owners of beneficial interests in a global note. Payments by the participants and the indirect participants to the owners of beneficial interests in a global note will be governed by standing instructions and customary industry practice
and will be the responsibility of the participants and indirect participants and not of DTC.
Transfers between participants
in DTC will be effected in accordance with DTCs procedures and will be settled in same-day funds.
S-25
Conveyance of notices and other communications by DTC to direct participants, by direct
participants to indirect participants, and by direct participants and indirect participants to holders owning beneficial interests in a global note will be governed by arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
Although DTC has agreed to the foregoing procedures to facilitate transfers of interests
in the global notes among participants in DTC, it is under no obligation to perform or to continue to perform those procedures, and those procedures may be discontinued at any time. Neither we nor the trustee will have any responsibility for the
performance by DTC or its participants or indirect participants of their respective obligations under the rules and procedures governing their operations.
We obtained the information in this section and elsewhere in this prospectus supplement concerning DTC and its book-entry system from sources that we believe are reliable, but we take no responsibility
for the accuracy of any of this information.
Certificated Notes
We will issue certificated notes to each person that DTC identifies as the beneficial owner of the notes represented by the global
securities upon surrender by DTC of the global securities only if:
|
|
|
DTC notifies us that it is no longer willing or able to act as a depository for the global securities, and we have not appointed a successor depository
within 90 days of that notice;
|
|
|
|
we decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository); or
|
|
|
|
an event of default has occurred and is continuing and DTC so requests.
|
Neither we nor the trustee will be liable for any delay by DTC, its nominee or any direct or indirect participant in identifying the
beneficial owners of the related notes. We and the trustee may conclusively rely on, and will be protected in relying on, instructions from DTC or its nominee for all purposes, including with respect to the registration and delivery, and the
respective principal amounts, of the notes to be issued in certificated form.
Information Concerning the Trustee
Manufacturers and Traders Trust Company is the trustee under the indenture. From time to time, we borrow from, maintain deposit accounts
with and conduct other banking transactions with the trustee and its affiliates in the ordinary course of business. Manufacturers and Traders Trust Company is a lender under certain credit facilities to members of the Sands family and other
affiliates of the company pursuant to which shares of class B common stock are pledged to secure borrowings thereunder.
S-26
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following discussion is a summary of material U.S. Federal income tax consequences of the acquisition, ownership and disposition of
the notes and is based upon the provisions of the Internal Revenue Code of 1986, as amended, or the Code, the applicable Treasury Regulations promulgated and proposed thereunder, judicial authority and current administrative rulings and
practice, all of which are subject to change, possibly with retroactive effect. The discussion does not purport to deal with all aspects of U.S. federal income taxation that might be relevant to particular holders in light of their personal
investment circumstances or status, nor does it discuss the U.S. federal income tax consequences to holders subject to special treatment under the U.S. federal income tax laws (for example, financial institutions, insurance companies, dealers in
securities, tax-exempt organizations, U.S. expatriates, persons subject to alternative minimum tax or taxpayers holding the notes through a partnership or similar pass-through entity or as part of a straddle, hedge or
conversion transaction). Moreover, the effect of any applicable state, local or foreign tax laws and other federal tax laws (such as estate and gift tax and Medicare contribution tax laws) is not discussed.
This discussion assumes that the notes are held as capital assets (as defined in Section 1221 of the Code) by the holders thereof.
The discussion is limited to the U.S. federal income tax consequences to holders acquiring notes at original issue for cash at the initial offering price.
PROSPECTIVE HOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS REGARDING THE FEDERAL, STATE, LOCAL AND OTHER TAX CONSEQUENCES TO THEM OF THE ACQUISITION, OWNERSHIP AND DISPOSITION OF THE NOTES.
U.S. Holders
For purposes of the following discussion, the term U.S. Holder means a beneficial owner of a note who or which is, for U.S. federal income tax purposes:
|
|
|
an individual who is a citizen or resident of the United States;
|
|
|
|
a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created or organized under the laws of the United States,
any state thereof or the District of Columbia;
|
|
|
|
an estate the income of which is subject to U.S. federal income taxation regardless of its source; or
|
|
|
|
a trust if a U.S. court is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to
control all substantial decisions of the trust, or if the trust has made a valid election to be treated as a United States person.
|
Interest on Notes
Interest on the notes generally will be included
in income by a U.S. Holder as ordinary interest income when received or accrued in accordance with the U.S. Holders regular method of accounting for U.S. federal income tax purposes.
Sale, Exchange, Redemption or Other Disposition of Notes
A sale, exchange,
redemption or other disposition of a note will generally be a taxable event for U.S. federal income tax purposes. In such event, a U.S. Holder will recognize gain or loss equal to the difference between:
|
|
|
the amount of cash plus the fair market value of any property received (except to the extent that amounts received are attributable to accrued
interest, which portion of the consideration would be taxed as ordinary income to the extent not previously included in income); and
|
|
|
|
the U.S. Holders adjusted tax basis in the note, which will generally equal the price paid for the note.
|
S-27
Such gain or loss will be capital gain or loss and will be long-term capital gain or loss
if the note has been held for more than one year at the time of disposition. For non-corporate taxpayers, net long term capital gains are generally subject to tax at preferential rates. The deductibility of capital losses is subject to certain
limitations.
Non-U.S. Holders
For purposes of the following discussion, the term non-U.S. Holder refers to a beneficial owner of a note that is for U.S. federal income tax purposes an individual, corporation, estate or
trust that is not a U.S. Holder.
Interest on Notes
Interest paid to a non-U.S. Holder in respect of the notes that is not effectively connected with the non-U.S. Holders trade or business in the United States generally will not be subject to
withholding of U.S. federal income tax provided that:
|
|
|
the non-U.S. Holder does not directly or indirectly, actually or constructively, own 10% or more of the total combined voting power of all classes of
our voting stock;
|
|
|
|
the beneficial owner is not a controlled foreign corporation with respect to which we are a related person within the meaning
of the Code;
|
|
|
|
the beneficial owner is not a bank receiving interest on an extension of credit made pursuant to a loan agreement in the ordinary course of its trade
or business; and
|
|
|
|
the non-U.S. Holder satisfies certain certification requirements. A beneficial owner will generally satisfy such certification requirements if it
certifies, under penalties of perjury, that it is not a United States person and provides its name and address.
|
If the above conditions are not met, interest paid to a non-U.S. Holder in respect of the notes that is not effectively connected with the non-U.S. Holders trade or business generally will be
subject to 30% U.S. federal withholding tax unless such non-U.S. Holder is entitled to a reduction in or an exemption from such withholding under an applicable income tax treaty between the United States and the non-U.S. Holders country of
residence provided that such non-U.S. Holder satisfies certain certification requirements (generally, on a properly executed IRS Form W-8BEN).
If a non-U.S. Holder is engaged in a trade or business in the United States and interest on the notes is effectively connected with the conduct of that trade or business (and, if required by an applicable
tax treaty, the interest is attributable to a permanent establishment or fixed base maintained by the non-U.S. Holder in the United States), the non-U.S. Holder will be subject to U.S. federal income tax on the interest on a net income basis in the
same manner as if such non-U.S. Holder were a U.S. Holder. Any interest income that is effectively connected with the conduct of a U.S. trade or business will not be subject to withholding of U.S. federal income tax if the non-U.S. Holder satisfies
certain certification requirements (generally, on a properly executed IRS Form W-8ECI or, in certain circumstances, W-8BEN). A non-U.S. Holder that is a foreign corporation that is engaged in a trade or business in the United States may also be
subject to a 30% (or, if a tax treaty applies, such lower rate as the treaty provides) branch profits tax on its effectively connected earnings and profits.
Sale, Exchange, Redemption or Other Disposition of Notes
A non-U.S.
Holder generally will not be subject to U.S. federal income tax on any gain recognized upon a sale, exchange, redemption or other disposition of a note unless:
|
|
|
that gain is effectively connected with the non-U.S. Holders conduct of a trade or business in the United States (and, if required by applicable
tax treaty, the gain is attributable to a permanent establishment or fixed base maintained by the non-U.S. Holder in the United States); or
|
S-28
|
|
|
the non-U.S. Holder is an individual who is present in the United States for 183 days or more in the taxable year of the disposition and certain other
conditions are met.
|
A non-U.S. Holder described in the first bullet point will be subject to U.S. federal
income tax on the gain on a net income basis in the same manner as if such non-U.S. Holder were a U.S. Holder. If such non-U.S. Holder is a foreign corporation, it may also be subject to a 30% (or, if a tax treaty applies, such lower rate as the
treaty provides) branch profits tax on its effectively connected earnings and profits. A non-U.S. Holder described in the second bullet point will be subject to 30% U.S. federal income tax on such gain unless an exemption or reduction under an
applicable income tax treaty applies.
Backup Withholding and Information Reporting
Information returns may be filed with the IRS in connection with payments on the notes and the proceeds from a sale or other disposition
(including a retirement or redemption) of the notes. A U.S. Holder may be subject to United States backup withholding tax at a rate of 28% on these payments if it fails to provide its taxpayer identification number to the paying agent and comply
with certification procedures or otherwise establish an exemption from backup withholding.
A non-U.S. Holder may be subject
to United States backup withholding tax on these payments unless the non-U.S. Holder complies with certification procedures to establish that it is not a U.S. person. The certification procedures required of non-U.S. Holders to claim the exemption
from withholding tax on certain payments on the notes, described in general terms above, will satisfy the certification requirements necessary to avoid the backup withholding tax as well. The amount of any backup withholding from a payment will be
allowed as a credit against the holders U.S. federal income tax liability and may entitle the holder to a refund, provided that the required information is timely furnished to the IRS.
Foreign Account Tax Compliance Act
Legislation incorporating provisions
referred to as the Foreign Account Tax Compliance Act (FATCA) was enacted on March 18, 2010. FATCA as initially enacted would apply to notes issued after March 18, 2012. However, recently issued proposed Treasury Regulations
extended the grandfathering date and provided that FATCA generally would not apply to notes that are outstanding on January 1, 2013, although investors cannot rely on the proposed Treasury regulations until they become finalized.
If FATCA does apply to the notes, FATCA generally will impose a U.S. federal withholding tax of 30% on interest income on a note paid on
or after January 1, 2014 and the gross proceeds from a disposition of a Note paid on or after January 1, 2015 to (i) a foreign financial institution (whether as a beneficial owner or an intermediary) if such institution fails to enter
into an agreement with the United States government to collect and provide to the United States tax authorities substantial information regarding United States account holders of such institution (which may include certain equity and debt holders of
such institution, as well as certain account holders that are foreign entities with United States owners) and (ii) a certain type of foreign entity that is not a financial institution (whether as a beneficial owner or an intermediary) if such
entity fails to provide the withholding agent with a certification identifying the substantial United States owners of the entity, which generally includes any United States person who directly or indirectly owns more than 10 percent of the entity,
unless an applicable exemption applies. Investors are encouraged to consult with their own tax advisors regarding the implications of FATCA on their investment in the notes.
S-29
UNDERWRITING
Merrill Lynch, Pierce, Fenner & Smith Incorporated, J. P. Morgan Securities LLC, Rabo Securities USA, Inc., and Barclays Capital
Inc. are acting as the joint book-running managers of the offering and Merrill Lynch, Pierce, Fenner & Smith Incorporated is acting as the sole representative of the underwriters named below.
Subject to the terms and conditions stated in the underwriting agreement dated the date of this prospectus supplement, each underwriter
named below has severally agreed to purchase, and we have agreed to sell to that underwriter, the principal amount of notes set forth opposite the underwriters name.
|
|
|
|
|
Underwriter
|
|
Principal
Amount
|
|
Merrill Lynch, Pierce, Fenner & Smith Incorporated
|
|
$
|
210,000,000
|
|
J. P. Morgan Securities LLC
|
|
$
|
120,000,000
|
|
Rabo Securities USA, Inc.
|
|
$
|
90,000,000
|
|
Barclays Capital Inc.
|
|
$
|
75,000,000
|
|
Goldman, Sachs & Co.
|
|
$
|
60,000,000
|
|
Wells Fargo Securities, LLC
|
|
$
|
45,000,000
|
|
|
|
|
|
|
Total
|
|
$
|
600,000,000
|
|
|
|
|
|
|
The underwriting agreement provides that the obligations of the underwriters to purchase the notes
included in this offering are subject to approval of legal matters by counsel and to other conditions. The underwriters are obligated to purchase all the notes if they purchase any of the notes. The offering of the notes by the underwriters is
subject to receipt and acceptance and subject to the underwriters right to reject any order in whole or in part. The underwriters may offer and sell notes through certain of their affiliates.
The underwriters propose to offer some of the notes directly to the public at the public offering price set forth on the cover page of
this prospectus supplement and some of the notes to dealers at the public offering price less a concession. The underwriters may allow, and dealers may reallow, a concession on sales to other dealers. After the initial offering of the notes to the
public, the representatives may change the public offering price and concessions.
We have agreed for a period of 60 days
following the date of this prospectus supplement not to sell or announce an intention to sell any debt securities similar to the notes without the consent of Merrill Lynch, Pierce, Fenner & Smith Incorporated.
The notes are a new issue of securities with no established trading market. The notes will not be listed on any securities exchange. We
have been advised by the underwriters that they intend to make a market in the notes, but the underwriters are not obligated to do so and may discontinue market making at any time without notice. We can give no assurance as to the liquidity of, or
the trading market for, the notes.
In connection with the offering, the underwriters may purchase and sell notes in the open
market. These transactions may include over-allotment, syndicate covering transactions and stabilizing transactions. Over-allotment involves syndicate sales of notes in excess of the principal amount of notes to be purchased by the underwriters in
the offering, which creates a syndicate short position. Syndicate covering transactions involve purchases of the notes in the open market after the distribution has been completed in order to cover syndicate short positions. Stabilizing transactions
consist of certain bids or purchases of notes made for the purpose of preventing or retarding a decline in the market price of the notes while the offering is in progress.
The underwriters also may impose a penalty bid. Penalty bids permit the underwriters to reclaim a selling concession from a syndicate member when an underwriter, in covering syndicate short positions or
making stabilizing purchases, repurchases notes originally sold by that syndicate member.
Any of these activities may have
the effect of preventing or retarding a decline in the market price of the notes. They may also cause the price of the notes to be higher than the price that otherwise would exist in the
S-30
open market in the absence of these transactions. The underwriters may conduct these transactions in the over-the-counter market or otherwise. If the underwriters commence any of these
transactions, they may discontinue them at any time.
We estimate that our total expenses for this offering (including
underwriting discounts) will be approximately $8.0 million.
The underwriters and their respective affiliates are full service
financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, investment research, principal investment, hedging, financing and brokerage
activities.
The underwriters and their affiliates have performed and may in the future perform various investment banking,
brokerage, commercial banking and advisory services for us from time to time for which they have received or will receive customary fees and expenses. In particular, affiliates of certain of the underwriters are currently lenders under our senior
credit facility (and certain affiliates of the underwriters are expected to be lenders under our proposed new senior credit facility), borrowings under which will be reduced with a portion of the net proceeds of the offering. The aggregate amount of
net proceeds from this offering, excluding underwriting compensation, intended to be used to reduce or retire the balance of a loan or credit facility extended by an individual underwriter and its affiliates, or otherwise directed to an individual
underwriter and its affiliates, will constitute less than 5% of the proceeds of this offering.
If any of the underwriters or
their affiliates has a lending relationship with us, certain of those underwriters or their affiliates routinely hedge, and certain other of those underwriters or their affiliates may hedge, their credit exposure to us consistent with their
customary risk management policies. Typically, these underwriters and their affiliates would hedge such exposure by entering into transactions which consist of either the purchase of credit default swaps or the creation of short positions in our
securities, including potentially the notes offered hereby. Any such credit default swaps or short positions could adversely affect future trading prices of the notes offered hereby.
In the ordinary course of their various business activities, the underwriters and their respective affiliates may make or hold a broad
array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers, and such investment and securities
activities may involve securities and/or instruments of the issuer (directly, as collateral securing other obligations or otherwise). The underwriters and their respective affiliates may also make investment recommendations and/or publish or express
independent research views in respect of such securities or instruments and may at any time hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments.
Affiliates of certain of the underwriters are agents and lenders under certain credit facilities to members of the Sands family and other
affiliates of the company pursuant to which shares of class A common stock and class B common stock are pledged to secure borrowings thereunder.
We have agreed to indemnify the several underwriters against certain liabilities, including liabilities under the Securities Act of 1933, or to contribute to payments the underwriters may be required to
make because of any of those liabilities.
We expect that delivery of the notes will be made to investors on or about April
17, 2012, which will be the fifth business day following the date of this offering memorandum (such settlement being referred to as T+5). Under Rule 15c6-1 under the Securities Exchange Act of 1934, trades in the secondary market
are required to settle in three business days, unless the parties to any such trade expressly agree otherwise. Accordingly, purchasers who wish to trade notes on the date hereof or the next succeeding business day will be required, by virtue of the
fact that the notes initially settle in T+5, to specify an alternate settlement arrangement at the time of any such trade to prevent a failed settlement. Purchasers of the notes who wish to trade the notes prior to their date of delivery
hereunder should consult their advisors.
S-31
Notice to Prospective Investors in the European Economic Area
In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a Relevant
Member State), with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the Relevant Implementation Date) no offer of notes may be made to the public in that Relevant
Member State other than:
|
A.
|
|
to any legal entity which is a qualified investor as defined in the Prospectus Directive;
|
|
B.
|
|
to fewer than 100 or, if the Relevant Member State has implemented the relevant provision of the 2010 PD Amending Directive, 150, natural or legal persons (other than
qualified investors as defined in the Prospectus Directive), as permitted under the Prospectus Directive, subject to obtaining the prior consent of the representative(s); or
|
|
C.
|
|
in any other circumstances falling within Article 3(2) of the Prospectus Directive;
|
provided, however, that no such offer of notes shall require the Company or the representative to publish a prospectus pursuant to Article 3 of the Prospectus Directive or supplement a prospectus pursuant
to Article 16 of the Prospectus Directive.
This prospectus has been prepared on the basis that any offer of notes in any
Relevant Member State will be made pursuant to an exemption under the Prospectus Directive from the requirement to publish a prospectus for offers of notes. Accordingly any person making or intending to make an offer in that Relevant Member State of
notes which are the subject of the offering contemplated in this prospectus may only do so in circumstances in which no obligation arises for the Company or any of the underwriters to publish a prospectus pursuant to Article 3 of the Prospectus
Directive in relation to such offer. Neither the Company nor the underwriters have authorized, nor do they authorize, the making of any offer of notes in circumstances in which an obligation arises for the Company or the underwriters to publish a
prospectus for such offer.
For the purpose of the above provisions, the expression an offer to the public in
relation to any notes in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the notes to be offered so as to enable an investor to decide to purchase or subscribe
the notes, as the same may be varied in the Relevant Member State by any measure implementing the Prospectus Directive in the Relevant Member State and the expression Prospectus Directive means Directive 2003/71/EC (including the 2010 PD
Amending Directive, to the extent implemented in the Relevant Member States) and includes any relevant implementing measure in the Relevant Member State and the expression 2010 PD Amending Directive means Directive 2010/73/EU.
Notice to Prospective Investors in the United Kingdom
In addition, in the United Kingdom, this document is being distributed only to, and is directed only at, and any offer subsequently made may only be directed at persons who are qualified
investors (as defined in the Prospectus Directive) (i) who have professional experience in matters relating to investments falling within Article 19 (5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005,
as amended (the Order) and/or (ii) who are high net worth companies (or persons to whom it may otherwise be lawfully communicated) falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to
as relevant persons). This document must not be acted on or relied on in the United Kingdom by persons who are not relevant persons. In the United Kingdom, any investment or investment activity to which this document relates is only
available to, and will be engaged in with, relevant persons.
Notice to Prospective Investors in Switzerland
This prospectus supplement does not constitute an issue prospectus pursuant to Article 652a or Article 1156 of the Swiss Code of
Obligations and the notes will not be listed on the SIX Swiss Exchange. Therefore, this
S-32
prospectus supplement may not comply with the disclosure standards of the listing rules (including any additional listing rules or prospectus schemes) of the SIX Swiss Exchange. Accordingly, the
notes may not be offered to the public in or from Switzerland, but only to a selected and limited circle of investors who do not subscribe to the notes with a view to distribution. Any such investors will be individually approached by the
underwriters from time to time.
Notice to Prospective Investors in the Dubai International Financial Centre
This prospectus supplement relates to an Exempt Offer in accordance with the Offered Securities Rules of the Dubai Financial Services
Authority (DFSA). This prospectus supplement is intended for distribution only to persons of a type specified in the Offered Securities Rules of the DFSA. It must not be delivered to, or relied on by, any other person. The DFSA has no
responsibility for reviewing or verifying any documents in connection with Exempt Offers. The DFSA has not approved this prospectus supplement nor taken steps to verify the information set forth herein and has no responsibility for the prospectus
supplement. The notes to which this prospectus supplement relates may be illiquid and/or subject to restrictions on their resale. Prospective purchasers of the notes offered should conduct their own due diligence on the notes. If you do not
understand the contents of this prospectus supplement you should consult an authorized financial advisor.
LEGAL MATTERS
The validity of our notes offered hereby will be passed upon for us by McDermott Will & Emery LLP. Certain legal matters in connection with the notes offered hereby will be passed upon for the
underwriters by Cahill Gordon & Reindel
LLP
.
S-33
P R O S P E C T U S
Constellation Brands, Inc.
Debt Securities, Preferred Stock, Depositary Shares Representing Preferred Stock, Class A Common Stock, Warrants, Stock Purchase
Contracts and Stock Purchase Units
We may sell
from time to time:
|
|
|
shares of our preferred stock, which may be represented by depositary shares;
|
|
|
|
shares of our Class A common stock;
|
|
|
|
stock purchase contracts;
|
|
|
|
stock purchase units; or
|
|
|
|
any combination of the foregoing.
|
The debt securities may be guaranteed by our subsidiaries identified in this prospectus.
We will provide specific terms of the securities which we may offer in supplements to this prospectus or a term sheet. You should read this prospectus and any prospectus supplement or term sheet carefully
before you invest. Securities may be sold for U.S. dollars, foreign currency or currency units.
Our Class A common stock
is listed on the New York Stock Exchange under the symbol STZ.
Investing in our securities involves certain
risks. See Risk Factors on page 1 of this prospectus.
We may offer and sell these securities to or
through one or more underwriters, dealers or agents, or directly to investors, on a continuous or delayed basis.
Neither the
Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The date of this prospectus is April 10, 2012.
Table of Contents
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement on Form S-3 that we filed with the Securities and Exchange Commission using a shelf registration process. Under this process, we may sell
any combination of the securities described in this prospectus in one or more offerings. This prospectus provides you with a general description of the securities we may offer. Each time we offer to sell securities, we will provide a supplement to
this prospectus or a term sheet that will contain specific information about the terms of that offering. The prospectus supplement or term sheet may also add, update, or change information contained in this prospectus. You should read both this
prospectus and any prospectus supplement or term sheet together with the additional information described under the heading Where You Can Find More Information, below.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy reports,
statements or other information at the SECs public reference room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference rooms. Our SEC filings are also available to
the public from commercial document retrieval services and at the website maintained by the SEC at http://www.sec.gov.
As noted above, we have filed with the SEC a registration statement on Form S-3 to register the securities. This prospectus is part of that registration statement and, as permitted by the SECs
rules, does not contain all the
i
information set forth in the registration statement. For further information you may refer to the registration statement and to the exhibits and schedules filed as part of the registration
statement. You can review and copy the registration statement and its exhibits and schedules at the public reference facilities maintained by the SEC as described above. The registration statement, including its exhibits and schedules, is also
available on the SECs website.
The SEC allows us to incorporate by reference the information we file with
it, which means that we can disclose important information to you by referring you to certain of those documents. The information incorporated by reference is considered to be part of this prospectus, and the information that we file with the SEC
after the date of this prospectus will automatically update and supersede this information. We incorporate by reference the documents listed below and any future filings we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934, until we sell all of the securities:
|
|
|
Annual Report on Form 10-K for the fiscal year ended February 28, 2011 filed on April 29, 2011;
|
|
|
|
Quarterly Reports on Form 10-Q for the fiscal quarter ended May 31, 2011 filed on July 11, 2011; for the fiscal quarter ended August 31,
2011 filed on October 11, 2011; and for the fiscal quarter ended November 30, 2011 filed on January 9, 2012;
|
|
|
|
An Amendment to our Quarterly Report on Form 10-Q for the fiscal quarter ended November 30, 2010 filed on August 10, 2011;
|
|
|
|
Current Reports on Form 8-K filed on April 8, 2011; April 29, 2011; June 1, 2011 (Item 5.02 only); July 25, 2011 (Items
5.02 and 5.07 only); and April 5, 2012 (of the two reports filed on that date, only the one reporting information under Items 5.02 and 9.01); and
|
|
|
|
The description of our Class A common stock, par value $.01 per share, and Class B common stock, par value $.01 per share, contained in
Item 1 of our registration statement on Form 8-A filed on October 4, 1999.
|
You may request a copy
of these filings, except exhibits to such documents unless those exhibits are specifically incorporated by reference into this prospectus, at no cost, by writing or telephoning us at: Constellation Brands, Inc., Attention: David S. Sorce, Secretary,
207 High Point Drive, Building 100, Victor, New York 14564; telephone number 585-678-7100.
You should rely only on the
information incorporated by reference or provided in this prospectus or any prospectus supplement or term sheet. We have not authorized anyone else to provide you with different or additional information. You should not assume that the information
in this prospectus or any prospectus supplement or term sheet is accurate as of any date other than the date on the front of those documents.
INFORMATION REGARDING FORWARD-LOOKING STATEMENTS
This prospectus, any prospectus supplement or term sheet, and the documents we have incorporated by reference into this prospectus may
contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act. These forward-looking statements are subject to a number of risks and
uncertainties, many of which are beyond our control, that could cause actual results to differ materially from those set forth in, or implied by, our forward-looking statements. All statements other than statements of historical facts included in
this prospectus and elsewhere regarding our business strategy, future operations, financial position, estimated revenues, projected costs, prospects, plans and objectives of management, as well as information concerning expected actions of third
parties, are forward-looking statements. These forward-looking statements are identifiable by our use of such words as anticipate, intend, estimate, expect, project and similar expressions,
although not all forward-looking statements contain such identifying words. All forward-looking statements speak only as of the date on which we make them. We do not undertake any obligation to update or revise any forward-looking statements,
whether as a result of new
ii
information, future events or otherwise. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we can give no assurance that such expectations will
prove to be correct. Important factors that could cause our actual results to differ materially from our expectations, or cautionary statements, are disclosed in this prospectus, any prospectus supplement or term sheet and the documents
incorporated by reference, including the Risk Factors section included in our filings with the SEC. The cautionary statements qualify all forward-looking statements attributable to us or persons acting on our behalf.
iii
CONSTELLATION BRANDS, INC.
We are the worlds leading premium wine company with a leading market position in both of our primary markets, which are the United
States (U.S.) and Canada. Our wine portfolio is complemented by select premium spirits brands and other select beverage alcohol products. We are also the leading marketer of imported beer in the U.S. through our investment in Crown Imports LLC, a
joint venture with Grupo Modelo, S.A.B. de C.V., pursuant to which Grupo Modelos Mexican beer portfolio is imported, marketed and sold by the joint venture in the U.S., along with certain other imported brands.
Since our founding in 1945 as a producer and marketer of wine products, we have grown through a combination of internal growth and
acquisitions. Our internal growth has been driven by leveraging our existing portfolio of leading brands, developing new products, new packaging and line extensions, and focusing on the faster growing sectors of the beverage alcohol industry. We
conduct our business through entities we wholly own as well as a variety of joint ventures with various other entities, both within and outside the U.S.
THE GUARANTORS
The guarantors of the debt
securities may include the following companies, each of which is a direct or indirect subsidiary of Constellation Brands, Inc.: ALCOFI INC.; Allberry, Inc.; Cloud Peak Corporation; Constellation Beers Ltd.; Constellation Leasing, LLC; Constellation
Services LLC; Constellation Trading Company, Inc.; Constellation Wines U.S., Inc.; Franciscan Vineyards, Inc.; Robert Mondavi Investments; Spirits Marque One LLC; The Hogue Cellars, Ltd.; and Vincor Finance, LLC. If so provided in a prospectus
supplement or term sheet, each of the guarantors will guarantee on a joint and several basis our obligations under the debt securities, subject to certain limitations.
RISK FACTORS
Investing in our securities
involves certain risks. You are urged to read and consider risk factors relating to an investment in our securities as described from time to time in our Annual Reports on Form 10-K, as may be updated from time to time in our Quarterly Reports on
Form 10-Q filed with the SEC, each as incorporated by reference in this prospectus. Before making an investment decision, you should carefully consider these risks as well as other information we include or incorporate by reference in this
prospectus. The risks and uncertainties we have described are not the only ones we face. The prospectus supplement applicable to each type or series of securities we offer will contain a discussion of additional risks applicable to an investment in
us and the particular type of securities we are offering under that prospectus supplement.
USE OF
PROCEEDS
Except as we may otherwise set forth in a prospectus supplement, we will use the net proceeds from the sale of
the securities offered by this prospectus for general corporate purposes, including, but not limited to, repayment or refinancing of indebtedness, working capital, capital expenditures and acquisitions. Pending the application of the proceeds, we
will invest the proceeds in certificates of deposit, U.S. government securities or other interest bearing securities.
DIVIDEND POLICY
We have not paid any cash dividends on our common stock since our initial public offering in 1973. We
currently intend to retain all of our earnings to finance the development and expansion of our business, but may in the future consider paying cash dividends on our common stock. In addition, the terms of our senior credit facility may restrict the
payment of cash dividends on our common stock under certain circumstances. Any indentures for debt securities issued in the future, the terms of any preferred stock issued in the future and any credit agreements entered into in the future may also
restrict or prohibit the payment of cash dividends on our common stock.
1
RATIO OF EARNINGS TO FIXED CHARGES AND EARNINGS
TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
The following table sets forth our historical ratio of earnings to fixed charges and our historical ratio of earnings to combined fixed charges and preferred stock dividends for the periods indicated. For
the purpose of calculating the ratio of earnings to fixed charges, earnings represent income (loss) before income taxes (adjusted, as appropriate, for equity in earnings of equity method investees) plus fixed charges less interest
capitalized. Fixed charges consist of interest expensed and capitalized, amortization of debt issuance costs, amortization of discount on debt, and the portion of rental expense which management believes is representative of the interest
component of lease expense. Preferred stock dividends consist of income before taxes that was required to pay the dividends on our previously outstanding Series A mandatory convertible preferred stock. Ratios of earnings to combined
fixed charges and preferred stock dividends are computed by dividing earnings by the sum of fixed charges and preferred stock dividends. On September 1, 2006, all outstanding shares of the Series A mandatory convertible preferred stock
converted into shares of Class A common stock.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Nine Months Ended
November 30,
|
|
|
For the Fiscal Years Ended
February 28,
|
|
|
For the Fiscal
Year Ended
February 29,
2008
|
|
|
For the Fiscal
Year Ended
February 28,
2007
|
|
|
|
2011
|
|
|
2010
|
|
|
2011
|
|
|
2010
|
|
|
2009
|
|
|
|
Ratio of Earnings to Fixed Charges
(1)
|
|
|
4.2x
|
|
|
|
3.8x
|
|
|
|
3.6x
|
|
|
|
1.9x
|
|
|
|
|
|
|
|
|
|
|
|
2.8x
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends
(1)
|
|
|
4.2x
|
|
|
|
3.8x
|
|
|
|
3.6x
|
|
|
|
1.9x
|
|
|
|
|
|
|
|
|
|
|
|
2.8x
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
For the years ended February 28, 2009 and February 29, 2008, earnings were inadequate to cover fixed charges. We would have needed to generate additional
earnings of $110.5 million and $443.2 million for the year ended February 28, 2009 and February 29, 2008, respectively, to achieve a coverage ratio of 1.0 to 1.0 for these periods.
|
DESCRIPTION OF DEBT SECURITIES
We may offer debt securities under this prospectus, any of which may be issued as convertible or exchangeable debt securities. The following description of the terms of the debt securities sets forth
certain general terms and provisions of the debt securities to which any prospectus supplement or term sheet may relate. We will set forth the particular terms of the debt securities we offer in a prospectus supplement or term sheet. The extent, if
any, to which the following general provisions apply to particular debt securities will be described in the applicable prospectus supplement or term sheet. The following description of general terms relating to the debt securities and the indenture
under which the debt securities will be issued are summaries only and therefore are not complete. You should read the indenture and the prospectus supplement or term sheet regarding any particular issuance of debt securities. If there are
differences between the applicable prospectus supplement or term sheet and this prospectus, the prospectus supplement or term sheet will control.
The debt securities will represent our unsecured general obligations, unless otherwise provided in the prospectus supplement or term sheet. If so provided in a prospectus supplement or term sheet, the
debt securities will have the benefit of the guarantees from the guarantors. Our subsidiaries are separate and distinct legal entities and have no obligation, contingent or otherwise, to pay any amounts due pursuant to the debt securities or to make
any funds available therefor, whether by dividends, loans or other payments, other than as expressly provided in the guarantees.
Our ability to service our indebtedness, including the debt securities, is dependent primarily upon the receipt of funds from our subsidiaries. The payment of dividends or the making of loans and advances
to us by our
2
subsidiaries may be subject to contractual, statutory and regulatory restrictions, and are contingent upon the earnings of those subsidiaries and are subject to various business considerations.
Further, any right we may have to receive assets of any of our subsidiaries upon liquidation or recapitalization of any such subsidiaries (and the consequent right of the holders of debt securities to participate in those assets) will be subject to
the claims of our subsidiaries creditors. Even in the event that we are recognized as a creditor of a subsidiary, our claims would still be subject to any security interest in the assets of such subsidiary and any indebtedness of such
subsidiary senior to our claim.
The debt securities will be issued under an indenture that will be entered into with the
guarantors and the trustee. The indenture will be subject to, and governed by, the Trust Indenture Act of 1939.
Except to the
extent described in a prospectus supplement or term sheet, the indenture will not contain any covenants or restrictions that afford holders of the debt securities special protection in the event of a change of control or highly leveraged
transaction.
The following is a summary of certain provisions of the debt securities that may be issued under the indenture,
and is not complete. A description of such debt securities shall be contained in a prospectus supplement or term sheet. You should carefully read the provisions of particular debt securities we may issue and the indenture under which the debt
securities are issued, including the definitions in those documents of certain terms and of those terms made a part of those documents by the Trust Indenture Act.
General
The indenture will not limit the aggregate principal amount of
debt securities which may be issued under it and provides that debt securities may be issued in one or more series, in such form or forms, with such terms and up to the aggregate principal amount that we may authorize from time to time. The
particular terms of the debt securities offered pursuant to any prospectus supplement or term sheet will be described in the prospectus supplement or term sheet. All debt securities of one series need not be issued at the same time and, unless
otherwise provided, a series may be reopened, without the consent of any holder, for issuances of additional debt securities of that series.
Unless otherwise provided in the prospectus supplement or term sheet, debt securities may be presented for registration of transfer and exchange and for payment or, if applicable, for conversion or
exchange at the office of the trustee.
The applicable prospectus supplement or term sheet will describe the following terms
of any debt securities in respect of which this prospectus is being delivered (to the extent applicable to the debt securities):
(1) the title and designation of the debt securities of the series, and whether the debt securities are senior debt securities, senior subordinated debt securities or subordinated debt securities and, if
senior subordinated or subordinated debt securities, the specific subordination provisions applicable thereto;
(2) the total principal amount of the debt securities of the series and any limit on the total principal amount;
(3) the price at which we will issue the debt securities of the series;
(4) the terms, if any, by which holders may convert the debt securities of the series into or for our common stock or
other of our securities or property;
(5) if the debt securities of the series are convertible, any limitations
on the ownership or transferability of the securities or property into which holders may convert the debt securities;
(6) the date or dates, or the method for determining the date or dates, on which we will be obligated to pay the principal of the debt securities of the series and the amount of principal we will be
obligated to pay;
3
(7) the rate or rates, which may be fixed or variable, at which the debt
securities of the series will bear interest, if any, or the method by which the rate or rates will be determined;
(8) the date or dates, or the method for determining the date or dates, from which any interest will accrue on the debt securities of the series, the dates on which we will be obligated to pay any such
interest, the regular record dates, if any, for the determination of the persons to whom we will be obligated to pay such interest;
(9) the place or places where the principal of, and any premium, interest or other amounts payable (if any) on, the debt securities of the series will be payable or where the holders of the debt
securities may surrender debt securities for conversion or transfer;
(10) any provisions relating to the
issuance of the debt securities at an original issue discount;
(11) the period or periods during which, the
price or prices (including any premium or other amount) at which, the currency or currencies in which, and the other terms and conditions upon which, we may redeem the debt securities of the series, at our option, if we have such an option;
(12) our obligations (if any) to redeem, repay or purchase debt securities pursuant to any sinking fund or
analogous provision or at the option of a holder of debt securities, and the price or prices at which, the period or periods within which and the terms and conditions upon which we will redeem, repay or purchase all or a portion of the debt
securities of the series pursuant to that obligation;
(13) if other than denominations of $1,000 and any
integral multiple thereof, the denominations in which the debt securities shall be issuable;
(14) any events
of default in lieu of or in addition to those described in this prospectus and remedies relating to such events of default;
(15) if other than the trustee, the identity of each security registrar, transfer agent, paying agent or other agent for debt securities of the series;
(16) the currency or currencies in which we will sell the debt securities and in which principal of, and any premium, or
interest or other amounts payable (if any) on, the debt securities of the series will be denominated and payable;
(17) whether the amount of payment of principal of, and any premium, or interest or other amounts payable (if any) on, the debt securities of the series may be determined with reference to an index,
formula or other method and the manner in which the amounts will be determined;
(18) whether and under what
circumstances we will pay any additional amounts on the debt securities to any holder who is not a U.S. person in respect of any tax, assessment or governmental charge withheld or deducted and, if we will pay additional amounts, whether we will have
the option, and on what terms to redeem the debt securities instead of paying the additional amounts;
(19) if
receipt of certain certificates or other documents or satisfaction of other conditions will be necessary for any purpose, including, without limitation, as a condition to the issuance of the debt securities in definitive form (whether upon original
issue or upon exchange of a temporary debt security), the form and terms of such certificates, documents or conditions;
(20) any other affirmative or negative covenant included for the benefit of the debt securities of the series;
(21) whether the debt securities will be issued in whole or in part in the form of one or more global securities and, in such case, the depositary for such a global security and the circumstances under
which any global security may be exchanged for debt securities registered in the name of, and under which any transfer of such global security may be registered in the name of, any person other than the depositary;
(22) whether the debt securities are defeasible;
4
(23) whether and the extent that the debt securities shall be guaranteed by
the guarantors, the ranking of such guarantee, the terms of such subordination, if applicable, of any such guarantee and the form of any such guarantee;
(24) if other than the principal amount thereof, the portion of the principal amount of the debt securities of the series which shall be payable upon declaration of acceleration of the maturity thereof
pursuant to an event of default or provable in bankruptcy, or, if applicable, which is convertible;
(25)
any proposed listing of the debt securities of the series on any securities exchange; and
(26) any other
specific terms of the debt securities.
Unless otherwise indicated in the prospectus supplement or term sheet relating to the
debt securities, principal of and any premium or interest on the debt securities will be payable, and the debt securities will be exchangeable and transfers thereof will be registrable, at the office of the trustee at its principal office. However,
at our option, payment of interest may be made by check mailed to the address of the person entitled thereto as it appears in the debt security register. Any payment of principal and any premium or interest required to be made on an interest payment
date, redemption date or at maturity which is not a business day need not be made on such date, but may be made on the next succeeding business day with the same force and effect as if made on the applicable date, and no interest shall accrue for
the period from and after such date.
Unless otherwise indicated in the prospectus supplement or term sheet relating to debt
securities, the debt securities will be issued only in fully registered form, without coupons, in denominations of $1,000 or any integral multiple thereof. No service charge will be made for any transfer or exchange of the debt securities, but we
may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection with a transfer or exchange.
Debt securities may be issued under the indenture for federal income tax purposes as Original Issue Discount Securities (as defined below). Federal income tax consequences and other special considerations
applicable to any such Original Issue Discount Securities (or other debt securities treated as issued at an original issue discount) will be described in the prospectus supplement relating to such securities. Original Issue Discount
Security generally means any debt security that (i) is issued at a price lower than its principal amount (subject to a de minimus exception), (ii) does not require the payment of interest in cash or property (other than debt
instruments of the issuer) at least annually throughout the term of the debt security or (iii) is issuable in exchange for property (including other debt instruments) and does not provide for adequate stated interest.
Global Securities
The
debt securities of a series may be issued in the form of one or more global securities that will be deposited with a depositary or its nominees identified in the prospectus supplement or term sheet relating to the debt securities. In such a case,
one or more global securities will be issued in a denomination or aggregate denominations equal to the portion of the aggregate principal amount of outstanding debt securities of the series to be represented by such global security or securities.
No global security may be transferred except as a whole by a nominee of the depositary for such global security to the
depositary or a nominee of the depositary and except in the circumstances described in the prospectus supplement or term sheet relating to the debt securities. The specific terms of the depositary arrangement with respect to a series of debt
securities will be described in the prospectus supplement or term sheet relating to such series.
5
Guarantees
In order to enable us to obtain more favorable interest rates and terms of payment of principal of, premiums (if any), other amounts (if any) and interest on the debt securities, the debt securities may
(if so specified in the prospectus supplement or term sheet) be guaranteed, jointly and severally, by all of the guarantors pursuant to guarantees. Guarantees will not be applicable to or guarantee our obligations with respect to the conversion of
the debt securities into shares of our capital stock or other securities. Each guarantee will be an unsecured obligation of each guarantor issuing such guarantee unless otherwise provided in the prospectus supplement or term sheet. The ranking of a
guarantee and the terms of the subordination, if any, will be set forth in the prospectus supplement or term sheet.
The
indenture provides that, in the event any guarantee would constitute or result in a violation of any applicable fraudulent conveyance or similar law of any relevant jurisdiction, the liability of the guarantor under such guarantee will be reduced to
the maximum amount (after giving effect to all other contingent and other liabilities of such guarantor) permissible under the applicable fraudulent conveyance or similar law.
Consolidation, Merger, Sale or Conveyance
The indenture provides that we
may consolidate with, or sell, convey or lease all or substantially all of our assets to, or merge with or into, any other corporation, if:
|
|
|
either we are the continuing corporation, or the successor corporation expressly assumes the due and punctual payment of the principal of and interest
on all the debt securities outstanding under the indenture according to their tenor and the due and punctual performance and observance of all of the covenants and conditions of the indenture to be performed or observed by us; and
|
|
|
|
immediately after the merger or consolidation, or the sale, conveyance or lease, no event of default, and no event which, after notice or lapse of time
or both, would become an event of default, shall have occurred and be continuing.
|
Modification of the Indenture
We and the trustee may modify the indenture with respect to the debt securities of any series, with or without the consent
of the holders of debt securities, under certain circumstances to be described in a prospectus supplement or term sheet.
Satisfaction and
Discharge of Indenture
We may terminate our obligations under the debt securities of any series, except for certain
limited surviving obligations, if either all of the debt securities of such series have been delivered to the trustee for cancellation or the debt securities of such series mature within one year or may be called for redemption within one year and,
among other things, we deposit with the trustee cash or appropriate government obligations sufficient for the payment of principal and interest on the debt securities of such series to maturity.
Defaults and Notice
The
debt securities will contain events of default to be specified in the applicable prospectus supplement or term sheet, including, without limitation:
|
|
|
failure to pay the principal of, or premium, if any, on any debt security of such series when due and payable (whether at maturity, by call for
redemption, through any mandatory sinking fund, by redemption at the option of the holder, by declaration of acceleration or otherwise);
|
6
|
|
|
failure to make a payment of any interest on any debt security of such series when due and payable, which failure shall have continued for a period of
30 days;
|
|
|
|
our, or any guarantors, failure to perform or observe any other covenants or agreements in the indenture or in the debt securities of such series
which failure shall have continued for a period of at least 90 days after written notice to us or the guarantors, as the case may be, by the trustee or to us and the trustee from the holders of not less than 25% of the aggregate principal amount of
the then outstanding debt securities of such series;
|
|
|
|
certain events of bankruptcy, insolvency or reorganization of us; and
|
|
|
|
any guarantee of a guarantor that is a significant subsidiary in respect of such series of debt securities shall for any reason cease to be, or be
asserted in writing by any guarantor thereof or us not to be, in full force and effect, and enforceable in accordance with its terms subject to certain exceptions.
|
If an event of default with respect to debt securities of any series shall occur and be continuing, the trustee or the holders of not
less than 25% in aggregate principal amount of the then outstanding debt securities of such series may declare the principal amount (or, if the debt securities of such series are issued at an original issue discount, such portion of the principal
amount as may be specified in the terms of the debt securities of such series) of all debt securities of such series or such other amount or amounts as the debt securities or supplemental indenture with respect to such series may provide, to be due
and payable immediately.
The indenture will provide that, at any time after a declaration of acceleration with respect to the
debt securities of any series as described in the preceding paragraph, the holders of a majority in principal amount of the then outstanding debt securities of such series may rescind and cancel such declaration and its consequences:
(1) if the rescission would not conflict with any judgment or decree;
(2) if all existing events of default with respect to the debt securities of such series have been cured or waived except
nonpayment of principal or interest that has become due solely because of the acceleration;
(3) to the extent
the payment of such interest is lawful, if interest on overdue installments of interest and overdue principal, which has become due otherwise than by such declaration of acceleration, has been paid; and
(4) if the Company has paid the trustee its reasonable compensation and reimbursed the trustee for its expenses,
disbursements and advances.
No such rescission shall affect any subsequent default or event of default or impair any right
consequent thereto.
The indenture provides that the trustee will, within 90 days after the occurrence of a default, give to
holders of debt securities of any series notice of all uncured defaults with respect to such series known to it. However, in the case of a default that results from the failure to make any payment of the principal of, premium, if any, or interest on
the debt securities of any series, or in the payment of any mandatory sinking fund installment with respect to debt securities of such series, the trustee may withhold such notice if it in good faith determines that the withholding of such notice is
in the interest of the holders of debt securities of such series.
The indenture contains a provision entitling the trustee to
be offered reasonable indemnity by holders of debt securities before proceeding to exercise any trust or power under the indenture at the request of such holders. The indenture provides that the holders of a majority in aggregate principal amount of
the then outstanding debt securities of any series may direct the time, method and place of conducting any proceedings for any remedy available to the trustee, or of exercising any trust or power conferred upon the trustee with respect to the debt
securities of such series. However, the trustee may decline to follow any such direction if, among other reasons, the trustee determines in good faith that the actions or proceedings as directed, would involve the trustee in personal liability or
would be unduly prejudicial to the holders of the debt securities of such series not joining in such direction.
7
The right of a holder of debt securities of any series to institute a proceeding with
respect to the indenture is subject to certain conditions including that the holders of at least 25% in aggregate principal amount of the debt securities of such series then outstanding make a written request upon the trustee to exercise its power
under the indenture, offer reasonable indemnity to the trustee and afford the trustee reasonable opportunity to act. Even so, the holder has an absolute right to receipt of the principal of, premium, if any, and interest when due, to require
conversion of debt securities if the indenture provides for convertibility at the option of the holder and to institute suit for the enforcement of such rights.
Concerning the Trustee
The prospectus supplement or term sheet with
respect to particular debt securities will describe any relationship that we may have with the trustee for such debt securities.
Reports
to Holders of Debt Securities
We intend to furnish to holders of debt securities all quarterly and annual reports that we
furnish to holders of our common stock, and file such additional information, documents and reports as may be required by the rules and regulations prescribed from time to time by the Securities and Exchange Commission.
DESCRIPTION OF PREFERRED STOCK
Our board of directors is authorized to issue in one or more series, generally without stockholder approval, up to 1,000,000 shares of preferred stock, par value $.01 per share. Undesignated shares of
preferred stock can be issued with such designations, preferences, qualifications, privileges, limitations, restrictions, options, voting powers (full or limited), conversion or exchange rights and other special or relative rights as the board of
directors shall from time to time fix by resolution. Thus, unless a specific stockholder approval requirement applies and subject to any statutory or contractual or other limitations as to class rights or other matters that might
apply, our board of directors could authorize the issuance of preferred stock with voting, conversion and other rights that could dilute the voting power and other rights of holders of our common stock. The prospectus supplement or term sheet
relating to a series of preferred stock will set forth the dividend, voting, conversion, exchange, repurchase and redemption rights, if applicable, the liquidation preference, and other specific terms of such series of preferred stock.
The description of certain provisions of the preferred stock set forth in any prospectus supplement or term sheet does not purport to be
complete and is subject to and qualified in its entirety by reference to our certificate of incorporation and the certificate of designations relating to each series of preferred stock. The applicable prospectus supplement or term sheet will
describe the specific terms of any series of preferred stock being offered which may include:
|
|
|
the specific designation, number of shares, seniority and purchase price;
|
|
|
|
any liquidation preference per share;
|
|
|
|
any redemption, repayment or sinking fund provisions;
|
|
|
|
any dividend rate or rates and the dates on which any such dividends will be payable (or the method by which such rates or dates will be determined);
|
|
|
|
if other than the currency of the United States, the currency or currencies (including composite currencies) in which such preferred stock is
denominated and in which payments will or may be payable;
|
|
|
|
the method by which amounts in respect of such series of preferred stock may be calculated and any commodities, currencies or indices, or value, rate
or price, relevant to such calculation;
|
8
|
|
|
whether such series of preferred stock is convertible or exchangeable and, if so, the securities or rights into which it is convertible or
exchangeable, and the terms and conditions upon which such conversions or exchanges will be effected;
|
|
|
|
the place or places where dividends and other payments on such series of preferred stock will be payable; and
|
|
|
|
any additional voting, dividend, liquidation, redemption and other rights, preferences, privileges, limitations and restrictions.
|
As described under Description of Depositary Shares below, we may, at our option, elect to
offer depositary shares evidenced by depositary receipts, each representing an interest (to be specified in the prospectus supplement or term sheet relating to the particular series of preferred stock) in a share of the particular series of
preferred stock issued and deposited with a depositary.
All shares of preferred stock offered by this prospectus, or issuable
upon conversion, exchange or exercise of securities, will, when issued, be validly issued and fully paid and non-assessable.
DESCRIPTION OF DEPOSITARY SHARES
We may offer fractional shares of preferred stock rather than full shares of preferred stock, and, in that event, will issue receipts for
depositary shares. Each of these depositary shares will represent a fraction, which will be set forth in the applicable prospectus supplement or term sheet, of a share of the applicable series of preferred stock. The shares of any series of
preferred stock underlying any depositary shares that we may sell under this prospectus will be deposited under a deposit agreement between us and a depositary selected by us. Subject to the terms of the deposit agreement, each holder of a
depositary share will be entitled, in proportion to the applicable fraction of a share of the preferred stock underlying the depositary share, to all of the rights, preferences and privileges, and be subject to the qualifications and restrictions,
of the preferred stock underlying that depositary share. The description set forth below and in any prospectus supplement or term sheet of certain provisions of the deposit agreement and of the depositary shares and depositary receipts is not
complete. You should carefully review the prospectus supplement or term sheet and the form of deposit agreement and form of depositary receipts relating to each series of preferred stock.
General
We may, at our option, elect to have shares of any series of
preferred stock be represented by depositary shares. The shares of any series of preferred stock underlying the depositary shares will be deposited under a separate deposit agreement that we will enter with a bank or trust company having its
principal office in the United States and a combined capital and surplus of at least $50,000,000. This bank or trust company will be considered the depositary. The prospectus supplement or term sheet relating to a series of depositary shares will
set forth the name and address of the depositary. Subject to the terms of the deposit agreement, each owner of a depositary share will be entitled, in proportion to the applicable interest in the number of shares of such series of preferred stock
underlying such depositary share, to all the rights and preferences of such series of preferred stock underlying such depositary share (including dividend, voting, redemption, conversion, exchange and liquidation rights).
The depositary shares will be evidenced by depositary receipts issued pursuant to the deposit agreement, each of which will represent the
applicable interest in a number of shares of such series of preferred stock described in the applicable prospectus supplement or term sheet.
Unless otherwise specified in the prospectus supplement or term sheet, a holder of depositary shares is not entitled to receive the shares of such series of preferred stock underlying the depositary
shares.
9
Pending the preparation of definitive depositary receipts, the depositary may, upon our
written order, issue temporary depositary receipts substantially identical to the definitive depositary receipts. Definitive depositary receipts will thereafter be prepared without unreasonable delay.
Dividends and Other Distributions
The depositary will distribute all cash dividends or other cash distributions received in respect of the applicable series of preferred stock to the record holders of depositary shares representing such
preferred stock in proportion to the numbers of depositary shares owned by the holders on the relevant record date.
In the
event of a distribution other than in cash, the depositary will distribute property received by it to the record holders of depositary shares entitled to such property, as nearly as practicable, in proportion to the number of depositary shares owned
by the holder. However, if the depositary determines that it is not feasible to make such distribution, it may, with our approval, sell such property and distribute the net proceeds from such sale to the holders. The amounts distributed by the
depositary may be reduced by any amount required to be withheld by us or the depositary on account of taxes.
The deposit
agreement will also contain provisions relating to the manner in which any subscription or similar rights we offer to holders of preferred stock shall be made available to holders of depositary shares.
Conversion and Exchange
If any preferred stock underlying the depositary shares is subject to provisions relating to its conversion or exchange as set forth in
the prospectus supplement or term sheet relating thereto, each record holder of depositary shares will have the right or obligation to convert or exchange such depositary shares pursuant to its terms.
Redemption of Depositary Shares
If a series of preferred stock underlying the depositary shares is subject to redemption, the depositary shares will be redeemed from the proceeds received by the depositary resulting from the redemption,
in whole or in part, of the series of preferred stock held by the depositary. The redemption price per depositary share will be equal to the aggregate redemption price payable with respect to the number of shares of such series of preferred stock
underlying the depositary shares. Whenever we redeem a series of preferred stock from the depositary, the depositary will redeem as of the same redemption date a proportionate number of depositary shares representing the shares of such series of
preferred stock that were redeemed. If less than all the depositary shares are to be redeemed, the depositary shares to be redeemed will be selected by lot or pro rata as we may determine.
After the date fixed for redemption, the depositary shares so called for redemption will no longer be deemed to be outstanding and all
rights of the holders of the depositary shares will cease, except the right to receive the redemption price payable upon such redemption.
Voting
Upon receipt of
notice of any meeting or action in lieu of any meeting at which the holders of any shares of a series of preferred stock underlying the depositary shares are entitled to vote, the depositary will mail the information contained in such notice to the
record holders of the depositary shares relating to such shares of preferred stock. Each record holder of such depositary shares on the record date (which will be the same date as the record date for such series of preferred stock) will be entitled
to instruct the depositary as to the exercise of the voting rights pertaining to the number of shares of such series of preferred stock underlying such holders depositary shares. The depositary will endeavor, as practicable, to vote the number
of shares of such series of preferred stock underlying such depositary shares in accordance with such instructions, and we will agree to take all action which may be deemed necessary by the depositary in order to enable the depositary to do so. If
the depositary does not receive instructions from the holders of depositary shares, the depositary will abstain from voting the preferred stock that underlies these depositary shares.
10
Amendment of the Deposit Agreement
The form of depositary receipt evidencing the depositary shares and any provision of the deposit agreement may at any time be amended by
agreement between us and the depositary. However, any amendment which materially and adversely alters the rights of the existing holders of depositary shares will not be effective unless such amendment has been approved by the holders of at least a
majority of the depositary shares then outstanding.
Charges of Depositary
We will pay all transfer and other taxes and governmental charges that arise solely from the existence of the depositary arrangements. We
will pay charges of the depositary in connection with the initial deposit of the applicable series of preferred stock and any exchange or redemption of such series of preferred stock. Holders of depositary shares will pay all other transfer and
other taxes and governmental charges, and, in addition, such other charges as are expressly provided in the deposit agreement to be for their accounts.
Miscellaneous
We, or at our option, the depositary, will forward to the
holders of depositary shares all of our reports and communications which we are required to furnish to the holders of the series preferred stock represented by the depository receipts.
Neither we nor the depositary will be liable if we or the depositary is prevented or delayed by law or any circumstances beyond our or
its control in performing our or its obligations under the deposit agreement. Our obligations and the depositarys obligations under the deposit agreement will be limited to performance in good faith and neither we nor the depositary will be
obligated to prosecute or defend any legal proceeding in respect of any depositary share or preferred stock unless satisfactory indemnity has been furnished. Both we and the depositary may rely upon written advice of counsel or accountants, or
information provided by persons presenting preferred stock for deposit, holders of depositary shares or other persons believed to be competent and on documents believed to be genuine.
Resignation and Removal of Depositary; Termination of the Deposit Agreement
The depositary may resign at any time by delivering notice to us of its election to do so, and we may at any time remove the depositary.
Any such resignation or removal will take effect upon the appointment of a successor depositary and its acceptance of such appointment. We will appoint a successor depositary within 60 days after delivery of the notice of resignation or removal. We
may terminate the deposit agreement or it may be terminated by the depositary if a period of 90 days expires after the depositary has delivered written notice to us of its election to resign and we have not appointed a successor depositary. Upon
termination of the deposit agreement, the depositary will discontinue the transfer of depositary receipts, will suspend the distribution of dividends to the holders of depositary receipts, and will not give any further notices (other than notice of
such termination) or perform any further acts under the deposit agreement except that the depositary will continue to deliver the applicable series of preferred stock certificates, together with dividends and distributions and the net proceeds of
any sales of rights, preferences, privileges or other property in exchange for depositary receipts surrendered. Upon our request, the depositary will deliver to us all books, records, certificates evidencing the applicable series of preferred stock,
depositary receipts and other documents relating to the subject matter of the deposit agreement.
DESCRIPTION OF COMMON STOCK
If we offer shares of Class A common stock, the prospectus supplement or term sheet will set forth the number of shares offered, the public offering price, information regarding our dividend history
and Class A common stock prices as reflected on the New York Stock Exchange or other exchange that the Class A common stock is then listed, including a recent reported last sale price of the Class A common stock. Our authorized
11
common stock currently consists of 377,000,000 shares, of which 322,000,000 shares are Class A common stock, par value $.01 per share, 30,000,000 shares are Class B common stock, par
value $.01 per share and 25,000,000 shares are Class 1 common stock, $.01 par value per share.
The shares of Class A
common stock offered by this prospectus will, when issued, be validly issued and fully paid and non-assessable, not subject to redemption and without preemptive or other rights to subscribe for or purchase any proportionate part of any new or
additional issues of stock of any class or of securities convertible into stock of any class.
The following descriptions of
our common stock and certain provisions of our Restated Certificate of Incorporation, as amended, and By-Laws, as amended and restated, are summaries and are not complete. You should carefully review the provisions of our Restated Certificate of
Incorporation, as amended, and By-Laws, as amended and restated, and appropriate provisions of the Delaware General Corporation Law.
General
The rights of
holders of Class A common stock and Class B common stock are identical except for voting, dividends and conversion rights. The rights of holders of Class 1 common stock are generally comparable to the rights of holders of Class B common
stock except that shares of Class 1 common stock do not generally have voting rights and the circumstances under which shares of Class 1 common stock are convertible into shares of Class A common stock are limited.
Voting
Holders of Class A common stock are entitled to one vote per share and holders of Class B common stock are entitled to 10 votes per share. Holders of Class A common stock, voting as a
class, are entitled to elect at least one fourth of the members of our board of directors to be elected at a meeting of stockholders. The holders of Class A common stock are entitled to elect the remaining directors voting together as a single
class with holders of Class B common stock, provided that the holders of Class A common stock have one vote per share and the holders of Class B common stock have 10 votes per share. If the number of outstanding shares of Class B
common stock increases to an amount equal to or more than 12
1
/
2
% of the aggregate number of outstanding shares of Class A common stock and Class B common stock, the holders of Class A common stock, voting as a class, would be entitled to elect at least
one fourth of the members of our board of directors to be elected at a meeting of stockholders and the holders of Class B common stock, voting as a class, would be entitled to elect the remaining directors.
Holders of Class 1 common stock are not entitled to vote except that such holders are entitled to vote as a separate class on matters
with respect to which a separate class vote of holders of Class 1 common stock is required by law and will be entitled to vote with respect to any increase or decrease in the authorized number of shares of Class 1 common stock as a single class with
the holders of Class A common stock and Class B common stock (in which case the holders of Class 1 common stock and Class A common stock will be entitled to one vote per share and the holders of Class B common stock will be entitled to ten
votes per share).
On all other matters submitted to a vote of the stockholders, the holders of Class A common stock and
Class B common stock vote together as a single class, except where a separate class vote is required under Delaware law.
Dividends
If we declare and pay a cash dividend on Class B common stock, we must declare and pay a cash dividend on Class 1 common
stock in the same amount per share, and if we declare and pay a cash dividend on Class 1 common stock, we must declare and pay a cash dividend on Class B common stock in the same amount per share. In addition, if we pay a cash dividend on
Class B common stock and Class 1 common stock, each share of Class A common stock will receive a cash dividend in an amount at least 10% greater than the amount of the
12
cash dividend per share paid on Class B common stock and Class 1 common stock. Our board of directors may declare and pay a dividend on Class A common stock without paying any dividend
on Class B common stock or Class 1 common stock. Our senior credit facility may restrict the payment of cash dividends on our common stock under certain circumstances.
Any indentures for debt securities issued in the future, the terms of
any preferred stock issued in the future and any credit agreements entered into in the future may also restrict or prohibit the payment of cash dividends on our common stock.
Conversion
Each share of Class B common stock is convertible into one
fully paid and non-assessable share of Class A common stock at the option of the holder at any time. The shares of Class A common stock are not convertible into or exchangeable for shares of Class B common stock or any of our other
securities. Each holder of a share of Class 1 common stock may convert shares of Class 1 common stock into shares of Class A common stock on a one-for-one basis; provided such conversion is permitted only if the holder immediately sells the
Class A common stock acquired upon conversion in a market transaction or to an unrelated party in a bona fide private sale. The Company does not intend to list the Class 1 common stock on the New York Stock Exchange or any other exchange. A
holder wishing to sell shares of Class 1 common stock may convert such shares of Class 1 common stock into shares of Class A common stock (which are currently listed on the New York Stock Exchange) immediately prior to a qualifying sale of the
shares. The terms of the Class 1 common stock do not impose any transfer restrictions on shares of Class 1 common stock; however, shares of Class 1 common stock may be subject to restrictions on transfer imposed by applicable securities laws.
Other Provisions
Holders of Class A common stock, Class B common stock and Class 1 common stock are entitled to share pro rata in the distribution of our assets available for such purpose in the event of our
liquidation, dissolution or winding up, after payment of, or provision for, creditors and distribution of, or provision for, preferential amounts and unpaid accumulated dividends to holders of preferred stock, if any. Holders of Class A common
stock, Class B common stock and Class 1 common stock have no preemptive rights to subscribe for any additional securities of any class which we may issue, and there are no redemption provisions or sinking fund provisions applicable to any such
classes, nor is the Class A common stock, Class B common stock and Class 1 common stock subject to calls or assessments.
Certain
Statutory Provisions
We are subject to Section 203 of the Delaware General Corporation Law. Section 203
prohibits a publicly held Delaware corporation from engaging in any business combination with any interested stockholder for a period of three years following the time that such person became an interested stockholder, unless
|
|
|
prior to the time the interested stockholder becomes an interested stockholder, the board of directors approved either the business combination or the
transaction which resulted in the stockholder becoming an interested stockholder;
|
|
|
|
upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owns at least 85%
of the outstanding voting stock; or
|
|
|
|
at or subsequent to the time the interested stockholder became an interested stockholder, the business combination is approved by the board of
directors and authorized at a meeting of the corporations stockholders by the affirmative vote of at least
66
2
/
3
% of the outstanding voting stock that is not owned by the interested
stockholder.
|
For purposes of Section 203, a business combination includes a merger, assets
sale or other transaction resulting in a financial benefit to the interested stockholder, and an interested stockholder is a person who, together with affiliates and associates, owns (or within three years, did own) 15% or more of the
corporations voting stock.
13
DESCRIPTION OF WARRANTS
The following is a general description of the terms of the warrants we may issue from time to time. Particular terms of any warrants we
offer will be described in the prospectus supplement or term sheet relating to such warrants.
General
We may issue warrants to purchase our Class A common stock, preferred stock, depositary shares, debt securities or any combination
thereof. Warrants may be issued independently or together with other securities and may be attached to or separate from those securities. The warrants will be issued under warrant agreements to be entered into between us and a warrant agent. The
warrant agent will act solely as our agent and will not assume any obligation or relationship of agency for or with holders or beneficial owners of warrants.
The particular terms of each issue of warrants, the warrant agreement relating to the warrants and the warrant certificates representing warrants will be described in the applicable prospectus supplement
or term sheet. This description will include:
|
|
|
the title of the warrants;
|
|
|
|
the price or prices at which the warrants will be issued, if any;
|
|
|
|
the designation and terms of the Class A common stock, preferred stock, depositary shares or debt securities for which the warrants are
exercisable;
|
|
|
|
if applicable, the designation and terms of the other securities with which the warrants are issued, and the number of warrants issued with each share
or unit of such other securities;
|
|
|
|
the currency or currencies, including composite currencies, in which the price of such warrants may be payable;
|
|
|
|
if applicable, the date on and after which the warrants and the other securities will be separately transferable;
|
|
|
|
the number of shares of Class A common stock, preferred stock, depositary shares or the principal amount of debt securities that may be purchased
upon exercise of a warrant and the price at which the shares or debt securities may be purchased upon exercise;
|
|
|
|
anti-dilution provisions of the warrants, if any;
|
|
|
|
with respect to debt securities only, whether the warrants represented by the warrant certificates or debt securities that may be issued upon exercise
of the warrants will be issued in registered or bearer form;
|
|
|
|
if applicable, a discussion of any material federal income tax considerations; and
|
|
|
|
any other terms of the warrants, including terms, procedures and limitations relating to the exchange and exercise of the warrants.
|
Modifications
The warrant agreement may be amended by us and the warrant agent, without the consent of the holder of any warrant certificate, for the purpose of curing any ambiguity, or of curing, correcting or
supplementing any defective provision contained in the warrant agreement, or making any provisions in regard to matters or questions arising under the warrant agreement that we may deem necessary or desirable; provided, that the amendment may not
adversely affect the interest of the holders of warrant certificates in any material respect.
14
DESCRIPTION OF STOCK PURCHASE CONTRACTS AND STOCK PURCHASE
UNITS
The following is a general description of the terms of the stock purchase contracts and stock purchase units we may
issue from time to time. Particular terms of any stock purchase contracts and/or stock purchase units we offer will be described in the prospectus supplement or term sheet relating to such stock purchase contracts and/or stock purchase units.
We may issue stock purchase contracts, representing contracts obligating holders to purchase from us, and we may sell to the
holders, a specified number of shares of Class A common stock, preferred stock or depositary shares at a future date or dates. The price per share of Class A common stock, preferred stock or depositary shares may be fixed at the time the
stock purchase contracts are issued or may be determined by reference to a specific formula set forth in the stock purchase contracts. Any stock purchase contract may include anti-dilution provisions to adjust the number of shares issuable pursuant
to such stock purchase contract upon the occurrence of certain events.
Stock purchase contracts may be issued separately or
as a part of units (stock purchase units) consisting of a stock purchase contract and our debt securities or debt obligations of third parties, including U.S. Treasury securities, in each case securing holders obligations to
purchase Class A common stock, preferred stock or depositary shares under the stock purchase contracts. The stock purchase contracts may require us to make periodic payments to the holders of the stock purchase units or vice versa, and such
payments may be unsecured or prefunded on some basis. The stock purchase contracts may require holders to secure their obligations thereunder in a specified manner.
The applicable prospectus supplement or term sheet will describe the terms of any stock purchase contracts or stock purchase units. Certain material federal income tax considerations applicable to the
stock purchase units and stock purchase contracts will be set forth in the prospectus supplement or term sheet relating thereto.
PLAN OF DISTRIBUTION
We may sell securities pursuant to this prospectus in any of four ways:
|
|
|
directly to purchasers;
|
|
|
|
through one or more underwriters or a syndicate of underwriters in an underwritten offering.
|
With respect to each offering of securities pursuant to this prospectus, among other information, the following will be set forth in, or
may be calculated from the information set forth in, the related prospectus supplement or term sheet:
|
|
|
the terms of any offering, including the name or names of any underwriters, dealers or agents, the purchase price of such series of debt securities and
the proceeds to us from such sale;
|
|
|
|
any underwriting discounts, selling commissions and other items constituting underwriters, dealers or agents compensation;
|
|
|
|
any initial public offering price and any discounts or concessions allowed or reallowed or paid to dealers or agents; and
|
|
|
|
any securities exchanges on which the securities of the series may be listed.
|
LEGAL OPINIONS
The validity of the securities offered by this prospectus will be passed upon by McDermott Will & Emery LLP. Legal counsel to any underwriters may pass upon legal matters for such underwriters.
15
EXPERTS
The consolidated financial statements of Constellation Brands, Inc. and subsidiaries as of February 28, 2011 and February 28,
2010, and for each of the years in the three-year period ended February 28, 2011, and managements assessment of the effectiveness of internal control over financial reporting as of February 28, 2011, have been incorporated by
reference herein in reliance upon the reports of KPMG LLP, independent registered public accounting firm, incorporated by reference herein, and upon the authority of said firm as experts in accounting and auditing.
The financial statements of Crown Imports LLC incorporated in this Prospectus by reference to Constellation Brands, Inc.s Annual
Report on Form 10-K, for the year ended February 28, 2011 have been so incorporated in reliance on the report of PricewaterhouseCoopers LLP, independent accountants, given on the authority of said firm as experts in auditing and accounting.
16
$600,000,000
6% Senior Notes due 2022
PROSPECTUS SUPPLEMENT
April 10, 2012
Joint Book Running Managers
BofA Merrill Lynch
J.P. Morgan
Rabo Securities
Barclays
Lead Manager
Goldman, Sachs & Co.
Co-Manager
Wells Fargo Securities
Constellation Brands (NYSE:STZ)
過去 株価チャート
から 6 2024 まで 7 2024
Constellation Brands (NYSE:STZ)
過去 株価チャート
から 7 2023 まで 7 2024