Constellation To Borrow $400Mil To Help Cover Ballast Point Acquisition

Constellation Brands plans to borrow $400 million to help cover its $1 billion acquisition of Ballast Point Brewing. The firm filed a form 424B3 with the SEC early Thursday. A copy of that filing can be accessed at this link

Quick Summary (Direct From Filing)

The Offering

The following summary of the terms of the notes is not complete. For a more detailed description of the notes, see “Description of the Notes and the Guarantees.” We define capitalized terms used in this summary in the “Description of the Notes and the Guarantees — Certain Definitions.”

 

Issuer

Constellation Brands, Inc.

 

Subsidiary Guarantors

The notes will be guaranteed by our subsidiaries that are guarantors under our senior credit facility. 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 amended, 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.

 

Securities Offered

$400,000,000 aggregate principal amount of             % Senior Notes due 2025.

 

Maturity

The notes will mature on             , 2025.

 

Interest

The notes will bear interest at a rate of         % per annum. Interest on the notes will accrue from             , 2015 and will be payable on              and              of each year, beginning             , 2016.

 

Ranking

The notes will be our senior unsecured obligations, 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. 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. 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 other liabilities of our subsidiaries that do not guarantee the notes, including borrowings under our accounts receivable securitization facilities and under European credit facilities in favor of an indirect wholly-owned Luxembourg subsidiary of the Company.

As of August 31, 2015, as adjusted to give effect to the issuance of the notes, we (together with certain of our subsidiaries) would have had approximately (i) $7.8 billion aggregate principal amount of senior indebtedness outstanding, of which approximately $2.9 billion was secured, (ii) $1.1 billion of available undrawn revolving commitments under the revolving portion of our senior credit facility, all of which would be secured, and (iii) $430.0 million available for borrowing under our accounts receivable securitization facilities. As of August 31, 2015, our non-guarantor subsidiaries had approximately $2.2 billion of liabilities. For the fiscal year ended February 28, 2015 and the six months ended August 31, 2015, approximately $559.9 million and $283.9 million, respectively, of our net sales were from our subsidiaries that are not guarantors of the notes. See “Capitalization.”

 

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 of 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 a discount rate equal to the applicable Treasury Rate (as defined in this prospectus supplement) plus 50 basis points.

 

We will also pay the accrued and unpaid interest, if any, 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 must offer to repurchase all the notes at a purchase price equal to 101% of the principal amount, plus accrued and unpaid interest, if any, to the repurchase date. 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.

 

Sinking Fund

None.

 

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.”

Use of Proceeds

We intend to use the net proceeds from this offering to fund a portion of the consideration for our pending acquisition of Ballast Point. Pending the application of the net proceeds for this purpose, we intend to invest the net proceeds in short-term, interest-bearing instruments. We intend to use cash on hand and borrowings under our senior credit facility or other credit facilities to pay the balance of the consideration payable for our pending acquisition of Ballast Point. If we do not acquire Ballast Point, we expect to use the net proceeds to reduce outstanding indebtedness or for other general corporate purposes. 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.