Item 1.01.
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Entry into a Material Definitive Agreement.
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Amended and Restated Membership Interest Purchase Agreement
Constellation
Beers Ltd., a Maryland corporation (Constellation Beers), an indirect wholly-owned subsidiary of Constellation Brands, Inc., a Delaware corporation (Constellation), currently owns a 50% interest in Crown Imports LLC
(Crown Imports). Crown Imports is a joint venture with GModelo Corporation, a Delaware corporation (Seller) and a wholly-owned subsidiary of Grupo Modelo, S.A.B. de C.V. (Modelo), through which Modelos
Mexican beer portfolio (the Modelo Brands) has been imported, marketed and sold in the U.S. since January 2007. Seller owns the other 50% interest in Crown Imports, which has the exclusive right to import, market and sell primarily the
Modelo Brands, which include Corona Extra, Corona Light, Modelo Especial, Pacifico, Negra Modelo and Victoria, in all 50 states of the U.S., the District of Columbia and Guam pursuant to the terms of an Importer Agreement, dated as of
January 2, 2007, by and between Extrade II, S.A. de C.V. (Extrade) and Crown Imports (as amended, the Existing Importer Agreement).
On June 28, 2012, Constellation Beers, Constellation Brands Beach Holdings, Inc., a Delaware corporation and indirect wholly-owned subsidiary of Constellation (CBBH), Constellation and
Anheuser-Busch InBev SA/NV, a Belgian corporation (ABI), entered into a Membership Interest Purchase Agreement (the Initial Purchase Agreement). On February 13, 2013, Constellation Beers, CBBH, Constellation and ABI
entered into an Amended and Restated Membership Interest Purchase Agreement (the Crown Purchase Agreement) that amended and restated the Initial Purchase Agreement. Pursuant to the Crown Purchase Agreement, ABI will cause the Seller to
sell, and Constellation Beers and CBBH will purchase, Sellers membership interest in Crown Imports (the Purchased Interest). Constellation Beers will purchase 98% of the Purchased Interest, and CBBH will purchase 2% of the
Purchased Interest. As a result of the purchase of the Purchased Interest by Constellation Beers and CBBH (the Crown Purchase), Constellation Beers will own a 99% interest in Crown Imports, CBBH will own a 1% interest in Crown Imports
and Crown Imports will become an indirect wholly-owned subsidiary of Constellation. The purchase price for the Purchased Interest is $1,845 million, to be paid on the date of the closing of the Crown Purchase.
The Crown Purchase Agreement contemplates that ABI and Constellation will enter into an Interim Supply Agreement (the Interim
Supply Agreement) at the closing of the transactions contemplated by the Crown Purchase Agreement (the Crown Closing). Pursuant to the Interim Supply Agreement, ABI will supply Crown Imports with the Modelo Brand products required
by Crown Imports for delivery and sale to Crown Imports customers in the U.S. (including the District of Columbia and Guam), subject to certain limitations based on Crown Imports product supply forecasts under the Interim Supply
Agreement. The prices for products purchased under the Interim Supply Agreement are fixed for the term, subject to an annual adjustment based on the U.S. consumer price index. The Interim Supply Agreement has a three year term, subject to two
one-year extensions at Crown Imports option in the event the planned expansion of the Piedras Negras Brewery (as defined below) has not been completed prior to the third or fourth anniversary, respectively, of the Crown Closing. Simultaneously
with the consummation of the Crown Closing, the Existing Importer Agreement would be terminated.
The closing of the Crown
Purchase is subject to certain closing conditions including the receipt of necessary Mexican antitrust approval relating to the Brewery Purchase (as defined below) and the consummation of certain transactions between ABI and Modelo and certain of
its affiliates (the GM Transaction), which is subject to the receipt of necessary U.S. and Mexican antitrust and other regulatory approvals. The Crown Purchase Agreement may be terminated by either Constellation or ABI if the Crown
Purchase has not been consummated by December 30, 2013 or if the GM Transaction is terminated. If the Crown Purchase Agreement is terminated because the GM Transaction is terminated, ABI must pay Constellation a termination fee of $75 million.
If, notwithstanding the Second Amended and Restated Interim Loan Agreement (as defined below), Constellation is unable to obtain financing sufficient to consummate the Transaction (as defined below) or Constellation otherwise fails to consummate the
Transaction, ABI has the right to require Constellation Beers to sell the 50% interest in Crown Imports that it currently owns to an alternative purchaser in a sale by ABI of the Purchased Interest and Constellation would be entitled to receive
consideration for the sale of Constellation Beers current 50% interest in Crown Imports in an amount equal to a multiple of one-half of Crown Imports earnings before interest and taxes (EBIT) for the 12 month period
immediately prior to the date of the definitive agreement or agreements for such transaction, which multiple would be the same as the multiple of the EBIT of all of the businesses sold by ABI in that transaction, minus $375 million.
The description of the Crown Purchase Agreement and the form of the Interim Supply Agreement
attached thereto as an exhibit are qualified in their entirety by the terms of the Crown Purchase Agreement (and the form of the Interim Supply Agreement attached thereto as an exhibit) which is attached hereto as Exhibit 2.1 and incorporated herein
by reference.
Stock Purchase Agreement
Also on February 13, 2013, ABI and Constellation entered into a Stock Purchase Agreement (the Brewery Purchase Agreement and, together with the Crown Purchase Agreement, the
Purchase Agreements), pursuant to which (i) Constellation agreed to purchase or cause one or more of its subsidiaries to purchase all of the issued and outstanding shares of capital stock of Compañia Cervecera de Coahuila,
S.A. de C.V., a sociedad anónima de capital variable organized under the laws of Mexico (the Brewery Company), and all of the issued and outstanding shares of capital stock of Servicios Modelo de Coahuila, S.A. de C.V., a sociedad
anónima de capital variable organized under the laws of Mexico (the Service Company), and (ii) ABI agreed to (a) cause Modelo to sell to Constellation or one or more of its subsidiaries all of the issued and outstanding
shares of capital stock of the Brewery Company and the Service Company (collectively, the Purchased Shares), and (b) cause Marcas Modelo, S.A. de. C.V. (Marcas Modelo) to grant to Constellation Beers the rights described
in an Amended and Restated Sub-License Agreement in the form attached as an exhibit to the Brewery Purchase Agreement (the Sub-License Agreement).
The Brewery Company owns and operates Modelos state-of-the-art Piedras Negras brewery located in Nava, Coahuila, Mexico (the Piedras Negras Brewery), sells the beer produced by the
Piedras Negras Brewery, and does not engage in or otherwise own or operate any other business lines or activities. The Service Company supplies employees for the operation and maintenance of the Piedras Negras Brewery, provides related human
resources, benefits and insurance, compliance, and payroll services to the Brewery Company and is not otherwise involved in any business or activity.
The Brewery Purchase Agreement contemplates that Marcas Modelo will enter into the Sub-License Agreement at the closing of the transactions contemplated by the Brewery Purchase Agreement (the
Brewery Closing). Pursuant to the Sub-License Agreement, Marcas Modelo will grant to Constellation Beers an irrevocable, exclusive (subject to certain exceptions), fully paid-up sub-license to use certain trademarks, recipes, trade
secrets, know-how, trade dress, mold designs, patents, copyrights, trade names, and certain other intellectual property rights in connection with the manufacture, bottling and packaging in Mexico (or worldwide under certain circumstances including
force majeure events) and importation, distribution, sale, resale, advertisement, promotion and marketing in all 50 states of the U.S., the District of Columbia and Guam of the Modelo Brands and certain extension brands (the Licensed
Rights and, together with the Purchased Interest and the Purchased Shares, the Purchased Assets), subject to the terms of the Sub-License Agreement. The term of the Sub-License Agreement is perpetual, and Marcas Modelo has no right
to terminate the Sub-License Agreement notwithstanding any breach of the Sub-License Agreement by Constellation Beers.
The
Brewery Purchase Agreement also contemplates that at the Brewery Closing ABI and Constellation will enter into a Transition Services Agreement (the Transition Services Agreement). Pursuant to the Transition Services Agreement ABI will
provide, or cause to be provided, to Constellation for the benefit of the Brewery Company, certain brewery operations services, procurement and logistics transition services, other general and administrative services, brewery expansion services,
supply services and other agreed services (collectively, the Services). The Brewery Company is generally entitled to
obtain the Services for up to thirty-six (36) months after the Brewery Closing, except brewery operations services are only available for six (6) months after the Brewery Closing.
Constellation will pay ABI or the provider of the Services the costs for the Services in accordance with the terms of the Transition Services Agreement. The Transition Service Agreement will terminate on the third anniversary of the Brewery Closing
or an earlier date as agreed by ABI and Constellation; provided, Constellation may terminate the Transition Services Agreement at any time and the Transition Services Agreement will terminate if there is a change of control of Constellation to a
Prohibited Owner (as defined in the Transition Services Agreement) or if Constellation Beers assigns the Sub-License Agreement to a Prohibited Owner.
The aggregate purchase price for the Purchased Shares and the grant of the Licensed Rights is $2,900 million, subject to adjustment if the EBITDA of Modelos operations relating to the production
profit on all sales of beer to Crown Imports during 2012 as defined in the Brewery Purchase Agreement (the 2012 EBITDA) is greater or less than $310 million. If the 2012 EBITDA is less than $310 million, Constellation will be entitled to
a purchase price refund equal to 9.3 times the amount by which the 2012 EBITDA is less than $310 million. If the 2012 EBITDA is greater than $310 million, Constellation or its subsidiaries will be required to pay an additional purchase price equal
to 9.3 times the amount by which the 2012 EBITDA is greater than $310 million; provided, the increased purchase price may not exceed a cap based on a 2012 EBITDA of $370 million and Constellation or its subsidiaries are not obligated to pay any
increased purchase price until the later of the first anniversary of the Brewery Closing or thirty days after the final determination of the 2012 EBITDA. The initial calculation of the 2012 EBITDA will be prepared by an accounting firm engaged by
Constellation and ABI. In the event of any disputes between Constellation and ABI regarding the calculation of the 2012 EBITDA that are not resolved by the parties, an independent accounting firm will be appointed by the parties to resolve the
dispute.
The Brewery Purchase Agreement contains representations and warranties of a type customary for transactions of this
type, including a representation by Constellation concerning the availability of financing for the payment of the purchase price payable pursuant to the Brewery Purchase Agreement and representations by ABI concerning the functional capability of
the Piedras Negras Brewery to produce ten million hectoliters of beer per year and, to ABIs knowledge (as defined in the Brewery Purchase Agreement), the ability of the Piedras Negras Brewery to be expanded to produce 20 million
hectoliters, which exceeds the volume of beer currently being sold by Crown Imports. As discussed below, Constellation already has in place the Second Amended and Restated Interim Loan Agreement, which satisfies Constellations financing
representations and warranties in the Brewery Purchase Agreement. The Brewery Purchase Agreement contains covenants and agreements of a type customary for transactions of this type, and contains certain additional rights, including that ABI will
discuss with Constellation the purchase by Constellation of a glass plant in Mexico owned by an affiliate of ABI if such affiliate desires to sell such glass plant.
The closing of the transactions contemplated by the Brewery Purchase Agreement (the Brewery Purchase and, together with the Crown Purchase, the Transaction) is subject to certain
closing conditions including the consummation of the Crown Purchase and the receipt of any necessary Mexican and U.S. antitrust approvals. Constellations obligation to consummate the Brewery Purchase is also subject to a force majeure event
occurring at the Piedras Negras Brewery that remains uncured. The Brewery Purchase Agreement may be terminated by either Constellation or ABI if the Crown Purchase Agreement has been terminated for any reason or if the GM Transaction is terminated.
If the Brewery Purchase Agreement is terminated because the GM Transaction is terminated, ABI must pay Constellation a termination fee of $117 million. The Brewery Purchase is projected to be consummated immediately following the consummation of the
Crown Purchase.
The descriptions of the Brewery Purchase Agreement and the forms of the Sub-License Agreement and Transition
Services Agreement attached thereto as exhibits are qualified in their entirety by the terms of the Brewery Purchase Agreement (and the forms of the Sub-License Agreement and Transition Services Agreement attached thereto as exhibits) which is
attached hereto as Exhibit 2.2 and incorporated herein by reference.
Overall Transaction
Following the Transaction, Constellation will have perpetual rights to the Modelo Brands in all 50 states of the U.S., the District of Columbia and Guam through the Sub-license Agreement, will be the sole
owner of Crown Imports, and will have independent brewing operations through its ownership of the Piedras Negras Brewery, which provides over half of the current supply of the Modelo Brands to the U.S. Over the course of the three years following
the Transaction, Constellation intends to expand the Piedras Negras Brewery, after which it will be capable of supplying 100% of Crown Imports projected needs for the U.S. marketplace. During this transition and expansion, the Interim Supply
Agreement and Transition Services Agreement will provide Crown Imports and Constellation with the necessary product supply for the Modelo Brands in the U.S. and the necessary support to transition the business of the Piedras Negras Brewery to
Constellation.
Pursuant to the Second Amended and Restated Interim Loan Agreement, the Bridge Lenders (as defined below) have
committed to make loans sufficient to finance the Crown Purchase, the Brewery Purchase and related costs. Although the Second Amended and Restated Interim Loan Agreement provides certainty of financing, Constellation plans to actually finance the
purchase price for the Purchased Assets and other costs related to the Transaction with available cash and proceeds from a combination of debt financings including incremental term loans under its Amended and Restated Credit Agreement, dated as of
August 8, 2012, among Constellation, Bank of America, N.A., as administrative agent, and the lenders and other parties party thereto (as may be subsequently amended, the 2012 Credit Agreement), revolver borrowings under the 2012
Credit Agreement, an accounts receivable securitization facility and the issuance of certain notes or debt securities.
Second Amended and
Restated Interim Loan Agreement
On June 28, 2012, Constellation, Bank of America, N.A., as administrative agent and a
lender, and JPMorgan Chase Bank, N.A., as a lender, entered into an Interim Loan Agreement (the Original Interim Loan Agreement) in connection with the entry into the Initial Purchase Agreement. On July 18, 2012, Constellation, Bank
of America, N.A., as administrative agent and a lender, JPMorgan Chase Bank, N.A., as a lender, and certain other lenders (all such parties other than Constellation are collectively referred to as the Bridge Lenders) entered into an
Amended and Restated Interim Loan Agreement (the Amended and Restated Interim Loan Agreement).
On
February 13, 2013, Constellation, Bank of America, N.A., as administrative agent (the Administrative Agent), and the Bridge Lenders entered into the Second Amended and Restated Interim Loan Agreement (the Second Amended and
Restated Interim Loan Agreement) that amended and restated the Amended and Restated Interim Loan Agreement to provide certainty of financing to fund the purchase price for the Purchased Assets and the other costs related to the Transaction.
The Second Amended and Restated Interim Loan Agreement provides for aggregate credit facilities of $4,375 million, consisting
of a $1,850 million term loan (the Bridge A Loan) and a $2,525 million term loan (the Bridge B Loan and, together with the Bridge A Loan, the Bridge Loans). The Bridge Loans must be borrowed, if at all, in
connection with the closing of the Transaction. The amount of the Bridge A Loan will be reduced by the amount of the first $1,850 million of proceeds from any debt securities issued by Constellation after the date of the Original Interim Loan
Agreement that are actually applied to pay a portion of the consideration payable under the Purchase Agreements on the date the Transaction is consummated (the Closing Date), and the Bridge B Loan will be reduced by the amount of any
revolving credit facility or term debt under the 2012 Credit Agreement, together with any cash
(other than cash that does not represent the proceeds of indebtedness in an amount not to exceed $370,000,000 in the aggregate) that is actually utilized on the Closing Date to fund a portion of
the consideration payable under the Purchase Agreements. The commitments to make each Bridge Loan expire on the earliest of (i) 5:00 p.m., New York City time, on December 30, 2013 unless the Closing Date occurs on or prior to such date,
(ii) the date of consummation of the Transaction without any borrowing under such Bridge Loan and (iii) the termination of the Purchase Agreements prior to the closing of the Transaction.
The obligation to make the Bridge Loans is subject to limited conditions, including: (i) the delivery of certain customary
documentation, (ii) the delivery of a certificate attesting to the solvency of Constellation and its subsidiaries, taken as a whole, (iii) Constellation having paid all fees and expenses due to the Bridge Lenders and the arrangers in
connection with financing activities relating to the Transaction, (iv) the Transaction having closed without a material adverse change in its terms, and (v) certain limited representations and warranties made by Constellation being true
and correct in all material respects on the Closing Date. Constellation intends to use the proceeds of the Bridge Loans, if any, to finance the Transaction and related expenses.
The Bridge Loans will bear interest at a rate per annum equal to the lesser of (i) LIBOR plus a margin, and (ii) an agreed cap
(the Total Cap), until the earlier of the first anniversary of the Closing Date (the Rollover Date) or the breach by Constellation of certain commitments, subject to a notice and cure period, relating to the offering of debt
securities and the issuance of other debt to finance the Transaction or refinance the Bridge Loans (a Demand Failure Event), after which Rollover Date or Demand Failure Event the Bridge Loans will bear interest at a rate per annum equal
to the Total Cap. The margin for periods prior to the earlier of the Rollover Date or a Demand Failure Event is 4.75% for the first three months following the Closing Date and increases by 0.50% every 3 months thereafter.
Subject to the satisfaction of certain conditions and requirements, from and after the Rollover Date the Bridge Lenders will have the
right to exchange Bridge Loans for exchange notes to be issued under an indenture to be entered into by Constellation and having terms as summarized in an exhibit to the Second Amended and Restated Interim Loan Agreement (Exchange
Notes). In the event of an issuance of Exchange Notes, Constellation would be required to enter into a registration rights agreement pursuant to which the holders of Exchange Notes would be entitled to require Constellation to register the
resale of the Exchange Notes under the Securities Act of 1933, as amended.
The Bridge Loans will mature on the eighth
anniversary of the Closing Date. Subject to certain limitations and until the Rollover Date, Constellation must offer to prepay the Bridge Loans with the proceeds of certain dispositions of assets unless such proceeds have been reinvested in assets
useful to its business. In addition, Constellation must offer to prepay the Bridge Loans in the event of a Change in Control (as defined in the Second Amended and Restated Interim Loan Agreement) and pay a 1% premium if a prepayment is made after
the occurrence of a Demand Failure Event as a result of such an offer. Constellation may prepay the Bridge Loans at any time without premium or penalty, except Constellation must pay a make-whole amount in connection with any prepayment after the
occurrence of a Demand Failure Event.
The obligations under the Second Amended and Restated Interim Loan Agreement are
guaranteed by certain subsidiaries of Constellation (the Guarantors) pursuant to a Guarantee Agreement, dated as of June 28, 2012 (the Guarantee Agreement). Each of the Guarantors unconditionally and irrevocably
guaranteed to the Administrative Agent, for the ratable benefit of the Bridge Lenders, the prompt and complete payment and performance of the indebtedness and other monetary obligations of Constellation under the bridge facility. On
February 13, 2013, the Guarantors entered into a Guarantor Consent and Reaffirmation (the Guarantor Consent) pursuant to which the Guarantors consented to the Second Amended and Restated Interim Loan Agreement and reaffirmed their
guarantees.
The Second Amended and Restated Interim Loan Agreement sets forth certain representations
and warranties of Constellation to the Administrative Agent and the Bridge Lenders. Constellation and its subsidiaries are also subject to covenants that are contained in the Second Amended and Restated Interim Loan Agreement, including those
restricting the incurrence of additional indebtedness (including guarantees of indebtedness), additional liens, mergers and consolidations, the payment of dividends, the making of certain investments, prepayments of certain debt, transactions with
affiliates, agreements that restrict Constellations non-guarantor subsidiaries from paying dividends, sale and leasebacks, and dispositions of property, in each case subject to numerous conditions, exceptions and thresholds, however certain
affirmative and negative covenants are effective only from and after the Closing Date, and in some cases run only through the Rollover Date, and in other cases are effective only from and after the Rollover Date.
The Second Amended and Restated Interim Loan Agreement provides for specified events of default, some of which provide for grace periods,
including failure to pay any principal or interest when due, any representation or warranty made by Constellation proving to be incorrect in any material respect, failure to comply with covenants or conditions, defaults relating to other material
indebtedness, certain insolvency or receivership events affecting Constellation or its subsidiaries, Constellation or its subsidiaries becoming subject to certain judgments prior to the Rollover Date, and the Guarantee Agreement ceasing to be in
full force and effect or an assertion to such effect being made by Constellation or any Guarantor. In the event of a default, the Administrative Agent may, and at the request of the requisite number of Bridge Lenders must, declare all obligations
under the Second Amended and Restated Interim Loan Agreement immediately due and payable. For certain events of default related to insolvency and receivership, all outstanding obligations of Constellation will become immediately due and payable. An
event of default will not provide a basis for the Bridge Lenders to cancel their commitments to make the Bridge Loans or to fund the Bridge Loans if the closing conditions are satisfied.
Constellation has the right to consent to any assignment by either Bank of America, N.A. or JPMorgan Chase Bank, N.A. if after giving
effect to the assignment, such lender would hold less than 20% of the aggregate commitments to make Bridge Loans. Constellation has also agreed in the Crown Purchase Agreement that it will not consent to any such reduction below this threshold.
The Bridge Lenders (or their affiliates) are lenders under the 2012 Credit Agreement, and the Administrative Agent is the
administrative agent under the 2012 Credit Agreement. The Bridge Lenders and their respective affiliates have performed, and may in the future perform, various commercial banking, investment banking, brokerage, and advisory services for
Constellation and its subsidiaries for which they have received, and will receive, customary fees and expenses. Without limiting the generality of the foregoing, in connection with anticipated financing activities relating to the Transaction the
Bridge Lenders, certain of their affiliates and Constellation have entered into an engagement letter with respect to the syndication of certain loan facilities and a fee letter, the Administrative Agent, one of its affiliates and Constellation have
entered into an administrative agency letter, and certain affiliates of the Bridge Lenders and Constellation have entered into an engagement letter with respect to the offering of certain notes and debt securities. In addition, Bank of America, N.A.
and JPMorgan Chase Bank, N.A. are lenders under certain credit facilities to a Sands family investment vehicle that, because of its relationship with members of the Sands family, is an affiliate of the Company. Such credit facilities are secured by
pledges of shares of class A common stock of the Company, class B common stock of the Company, or a combination thereof and personal guarantees of certain members of the Sands family, including Richard Sands and Robert Sands.
The descriptions of the Second Amended and Restated Interim Loan Agreement and the Guarantor
Consent are qualified in their entirety by the terms of the Second Amended and Restated Interim Loan Agreement and the Guarantor Consent, as applicable, which are attached hereto as Exhibit 4.1 and Exhibit 10.1, respectively, and incorporated
herein by reference.
The Crown Purchase Agreement, the Brewery Purchase Agreement, the Second Amended and Restated Interim Loan Agreement, and the
Guarantor Consent (collectively, the Filed Agreements) have been filed as exhibits to this Current Report on Form 8-K/A to provide investors with information regarding their terms and are not intended to provide factual information about
parties thereto, or any of their respective subsidiaries or affiliates. The representations, warranties, and covenants contained in the Filed Agreements were made only for purposes of those agreements and as of specific dates, are solely for the
benefit of the parties to the Filed Agreements, may be subject to limitations agreed upon by the parties, including being qualified by confidential disclosures made for the purposes of allocating contractual risk between the parties to the Filed
Agreements instead of establishing these matters as facts, and may be subject to standards of materiality applicable to the parties that differ from those applicable to investors. In addition, such representations and warranties were made only as of
the respective dates of the Filed Agreements or such other dates as may be specified in a Filed Agreement. Investors should not rely on the representations, warranties, or covenants or any description thereof as characterizations of the actual state
of facts or condition of the parties or any of their respective subsidiaries or affiliates. Moreover, information concerning the subject matter of the representations and warranties may change after the dates of the Filed Agreements, which
subsequent information may or may not be fully reflected in Constellations public disclosures.