April 4, 2013 / 5:41 PM / 5 years ago

RLPC: Constellation Brands launches $2.49B acq deal

NEW YORK, April 4 (Reuters) - Constellation Brands launched $2.49 billion in credit facilities at a bank meeting earlier today to back its $4.75 billion acquisition of the Corona and Modelo brand licenses and a stake in Crown Imports LLC from Anheuser-Busch InBev, sources told Thomson Reuters LPC.

The loans consist of an $850 million revolving credit facility, a $516 million term loan A, a $247 million U.S. Term loan A-1, a $575 million term loan A-2 and a $300 million European term loan A.

A separate $1.2 billion European term loan B will be launched to institutional investors shortly.

The loans will be used to take out a $4.75 billion bridge loan the company obtained in February to back the acquisitions. Bank of America Merrill Lynch, JP Morgan, RaboBank, Barclays, and CoBank are jointly leading the loans.

The $300 million European term loan A and the $1.2 billion European term loan B will constitute new money to the company.

Meanwhile, banks are being asked to renew their lending commitments to the pre-existing $850 million revolver, $516 million term loan A, $247 million U.S. Term loan A-1 and $575 million delayed-draw TLA-2. The company originally entered into these loans in 2012.

To complete the Crown-Modelo acquisition, the company also expects to sell $1.65 billion in bonds and use $370 million of cash on hand and accounts receivable securitization borrowings.

The revolver, term loan A, TLA-2 and European term loan A will mature five years after the acquisitions close. The TLA-1 and European TLB will mature in six years and seven years, respectively.

Pricing on the revolver, term loan A, TLA-2 and European term loan A will initially be set at LIB+200. Pricing on the TLA-1 will initially be set at LIB+225.

The TLA, TLA-2 and European TLA will amortize at a rate of 5 percent per year during the first two years, 10 percent in years three through five with the balance due at maturity. The TLA-1 and European TLB will amortize at a rate of 1 percent per year with the remaining balance due at maturity.

Financial covenants will include a maximum total leverage covenant of 5.75 times in the first year and a step down to 5.5 times thereafter. A minimum interest coverage covenant of 2.5 times will also apply.

Lender commitments to all but the European term loan B are due April 18.

On February 14, Anheuser-Busch InBev said that it would sell Compania Cervecera de Coahuila, Grupo Modelo’s brewery in Piedras Negras, Mexico, and the Corona and Modelo brand licenses to Constellation for $2.9 billion. This came on top off a previously announced agreement for AB InBev to sell Grupo Modelo’s 50 percent stake in Crown Imports LLC to Constellation, for $1.85 billion.

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