Registration Document - Pernod Ricard

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MANAGEMENT REPORT
cant contracts
Significant contracts
2008 Credit Agreement
Within the context of the purchase of V&S Vin&Sprit Aktiebolag
(“V&S”), on 27 March 2008, Pernod Ricard and a number of subsidiaries
signed a new credit agreement (“the Credit Agreement”), to which
further clauses have been added, with a pool of banks headed by BNP
Paribas, Calyon, J.P. Morgan Plc, Natixis, The Royal Bank of Scotland
Plc and Société Générale Corporate & Investment Banking.
The main purpose of this Credit Agreement was to refinance existing
Group debt (including the entire amount drawn down under the
21 April 2005 credit agreement upon the purchase of Allied Domecq)
and to finance the purchase of V&S.
The main terms of the Credit Agreement are as follows:
◆ Facility A – a medium-term loan in euros for €1,000 million;
◆ Facility B – medium-term loans, including a facility in euros for
€665 million and another in US dollars for $3,620 million;
◆ Facility C – five-year loans, including a facility in euros for
€713 million and another in US dollars for $6,518 million;
◆ Facility D – a five-year loan in euros for €600 million to refinance
a bond issue by Allied Domecq Financial Services Ltd amounting to
€600 million at a nominal rate of 5.875% due on 12 June 2009;
◆ Facility E – two multi-currency revolving credit lines for
€1,200 million and €820 million.
The loan was drawn down to pay for the V&S acquisition on 23 July
2008 and to refinance bonds issued by Allied Domecq Financial
Services Ltd. The amounts drawn down under the Credit Agreement
at 30 June 2009 came to approximately €8.1 billion. At 30 June 2009,
Facility A had been repaid in full.
The obligations of each of the borrowers under the Credit Agreement
are guaranteed by Pernod Ricard. No collateral was granted under the
terms of the Credit Agreement.
The Credit Agreement contains the customary representations and
warranties, as well as the usual restrictive covenants contained
in such contracts, restricting the ability of certain companies in
the Pernod Ricard Group (subject to some exceptions) to arrange
additional loans or pledge their assets as collateral, alter the general
nature of the Group’s activities or carry out acquisition, disposal or
restructuring transactions.
The Credit Agreement also sets out commitments including a
commitment to provide lenders with adequate information,
compliance with two financial ratios at each half-year end (a coverage
ratio, i.e. consolidated EBITDA/consolidated net financial expenses,
and a solvency ratio, i.e. total consolidated net debt/consolidated
PERNOD RICARD
EBITDA) as well as compliance with certain commitments customary
in this type of credit agreement (including the maintenance of the
credit’s pari passu ranking). The solvency ratio must be less than or
equal to 6.75 at 31 December 2009 and the coverage ratio must be
greater than or equal to 2.50 at 31 December 2009.
In November 2008 an initial amendment allowed the calculation
of the hedging ratio (total consolidated net debt/consolidated
EBITDA) by converting debt at the average exchange rate for the
year. This method avoids the calculation bias which would have been
generated if debt had been converted at the year end exchange rate
and consolidated EBITDA converted at the average exchange rate for
the year. Year end rates continue to be used to calculate this ratio for
credit margins.
In June 2009 a second amendment was made in relation to the
assessment of these two financial ratios and the calendar which
should be applied. With effect from 30 June 2010, the applicable
calendar has been delayed by one year.
The Credit Agreement also provides for voluntary or compulsory
early repayment obligations, depending on circumstances, standard
practice in this kind of credit agreement (e.g., compliance with
commitments, change of control, cross default). The Credit Agreement
contains a clause under which the taking of control of the Company by
any person or group of persons acting together (other than the Société
Paul Ricard SA or any group of persons acting together with the
Société Paul Ricard SA) is likely to constitute grounds for compulsory
early repayment.
Bond Issue of June 2009
M id-June 2009 Pernod Ricard successfully issued €800 million of
fixed-rate bonds, maturing on 15 January 2015. The bonds have
a nominal value of €50,000 and are traded on the Luxembourg
regulated Stock Exchange .
The bonds have an annual fixed interest rate of 7%, payable annually
on 15 January of each year.
The proceeds of this bond issue allowed Pernod Ricard to repay the
shortest-term tranches of the syndicated loan in order to extend the
Group’s debt maturity.
This bond includes a clause regarding change of control, which could
lead to the compulsory early repayment of bonds upon request of
each bond holder in the event of a change of control in the Company
(benefiting a person or a group of persons acting together) and
leading to deterioration in the Company’s financial rating.
I REFERENCE DOCUMENT 2008/2009 I