UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 OR 15(d)
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| Item 1.01 | Entry into a Material Definitive Agreement. |
On August 26, 2022, Conagra Brands, Inc. (the “Company”) entered into (i) a Term Loan Agreement (the “Term Loan Agreement”) with Farm Credit Services of America, PCA (“FCSA”), as administrative agent and a lender, and the other lenders party thereto, providing for delayed draw term loans to the Company in an aggregate principal amount of up to $500 million and (ii) a Second Amended and Restated Revolving Credit Agreement (the “Revolving Credit Agreement”) with Bank of America, N.A. (“Bank of America”), as administrative agent and a lender, and the other lenders party thereto, providing for a revolving credit facility in a maximum aggregate principal amount outstanding at any one time of $2.0 billion (subject to increase to a maximum aggregate principal amount of $2.5 billion).
Term Loan Agreement
The term loan facility provided for under the Term Loan Agreement matures on August 26, 2025 and is unsecured.
The term loans will bear interest at, at the Company’s election, either (a) the sum of Term SOFR, plus a 0.10% per annum rate spread adjustment, plus a percentage spread (ranging from 0.90% per annum to 1.375% per annum) based on the Company’s senior unsecured long-term indebtedness ratings or (b) the alternate base rate, described in the Term Loan Agreement as the greatest of (i) FCSA’s prime rate, (ii) the federal funds rate plus 0.50% and (iii) one-month Term SOFR plus 1.00%, plus a percentage spread (ranging from 0% per annum to 0.375% per annum) based on the Company’s senior unsecured long-term indebtedness ratings.
The Term Loan Agreement contains customary affirmative and negative covenants for unsecured investment grade credit facilities of this type and financial covenants requiring compliance with a maximum net leverage ratio and a minimum interest coverage ratio. The Company may voluntarily prepay term loans under the Term Loan Agreement, in whole or in part, without premium or penalty, subject to certain conditions.
The Term Loan Agreement contains events of default customary for unsecured investment grade credit facilities with corresponding grace periods. If an event of default occurs and is continuing, the lenders may terminate and/or suspend their obligations to make loans under the Term Loan Agreement and/or accelerate amounts due under the Term Loan Agreement and exercise other rights and remedies. In the case of certain events of default related to insolvency and receivership, the commitments of the lenders will be automatically terminated and all outstanding obligations of the Company will become immediately due and payable.
The Company currently expects that it will use the proceeds from its borrowings under the Term Loan Agreement, together with borrowings under its commercial paper program, to fund the repayment or redemption of outstanding long-term debt maturing in fiscal year 2023 and for other general corporate purposes.
A copy of the Term Loan Agreement is filed as Exhibit 10.1 hereto. The foregoing description of the Term Loan Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Term Loan Agreement, which is incorporated by reference herein.
Revolving Credit Agreement
The revolving credit facility provided for under the Revolving Credit Agreement replaces the Company’s revolving credit facility under the prior revolving credit agreement (as amended, supplemented or otherwise modified from time to time prior to the date hereof, the “Prior Revolving Credit Agreement”), dated as of July 11, 2018, among the Company, Bank of America, N.A., as administrative agent and a lender, JPMorgan Chase Bank, N.A., as syndication agent and a lender, and the other financial institutions party thereto. The maturity date of the Prior Revolving Credit Agreement was July 11, 2024. No borrowings were outstanding under the Prior Revolving Credit Agreement upon its termination.
The revolving credit facility provided for under the Revolving Credit Agreement matures on August 26, 2027, and is unsecured. The term of the Revolving Credit Agreement may be extended for additional one-year or two-year periods from the then applicable maturity date on an annual basis.
Loans under the revolving credit facility will bear interest at, at the Company’s election, either (a) the sum of Term SOFR, plus a 0.10% per annum rate spread adjustment, plus a percentage spread (ranging from 0.930% per annum to 1.30% per annum) based on the Company’s senior unsecured long-term indebtedness ratings or (b) the alternate base rate, described in the Revolving Credit Agreement as the greatest of (i) Bank of America’s prime rate, (ii) the federal funds rate plus 0.50% and (iii) one-month Term SOFR plus 1.00%, plus a percentage spread (ranging from 0.0% per annum to 0.30% per annum) based on the Company’s senior unsecured long-term indebtedness ratings.
The Company has agreed to pay a facility fee, payable quarterly, at rates that range from 0.07% per annum to 0.20% per annum (based on the Company’s senior unsecured long-term debt ratings), and customary administrative agent fees and fees in respect of letters of credit.
The Revolving Credit Agreement contains customary affirmative and negative covenants for unsecured investment grade credit facilities of this type and financial covenants requiring compliance with a maximum net leverage ratio and a minimum interest coverage ratio.
The Revolving Credit Agreement contains events of default customary for unsecured investment grade credit facilities with corresponding grace periods. If an event of default occurs and is continuing, the lenders may terminate and/or suspend their obligations to make loans and issue letters of credit under the Revolving Credit Agreement and/or accelerate amounts due under the Revolving Credit Agreement and exercise other rights and remedies. In the case of certain events of default related to insolvency and receivership, the commitments of the lenders will be automatically terminated and all outstanding obligations of the Company will become immediately due and payable.
Certain of the lenders under the Revolving Credit Agreement (and their respective subsidiaries or affiliates) have in the past provided, are currently providing or may in the future provide, investment banking, cash management, underwriting, lending, commercial banking, trust, leasing services, foreign exchange and other advisory services to, or engage in transactions with, the Company and its subsidiaries or affiliates. These parties have received, and may in the future receive, customary compensation from the Company and its subsidiaries or affiliates, for such services.
A copy of the Revolving Credit Agreement is filed as Exhibit 10.2 hereto. The foregoing description of the Revolving Credit Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Revolving Credit Agreement, which is incorporated by reference herein.
| Item 2.03 | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
The description contained under Item 1.01 above is hereby incorporated by reference in its entirety into this Item 2.03.
| Item 9.01 | Financial Statements and Exhibits. |
| Exhibit |
Description | |
| 10.1 | Term Loan Agreement, dated August 26, 2022, by and among Conagra Brands, Inc., Farm Credit Services of America, PCA, as administrative agent and a lender, and the other lenders party thereto | |
| 10.2 | Second Amended and Restated Revolving Credit Agreement, dated August 26, 2022, by and among Conagra Brands, Inc., Bank of America, N.A., as administrative agent and a lender, and the other lenders party thereto | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| CONAGRA BRANDS, INC. | ||
| By: | /s/ Carey Bartell | |
| Name: | Carey Bartell | |
| Title: | Executive Vice President, General Counsel and Corporate Secretary | |
Date: August 29, 2022