CONSTELLATION BRANDS, INC. : Entering into a Material Definitive Agreement, Creating a Direct Financial Obligation or Obligation Under an Off-Balance Sheet Registrant Arrangement, Financial Statements and Exhibits (Form 8-K)

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Section 1.01 Entering into a Material Definitive Agreement.

On August 9, 2022 (the “Effective Date”), Constellation Brands, Inc. (the “Company” or “Constellation”), Bank of America, North America., as administrative agent (the “Administrative Agent”), and certain other lenders (the “Credit Agreement Lenders”), have entered into a Term Credit Agreement (the “Credit Agreement” and the loans granted thereunder the “Term Loans”).

The credit agreement provides for a one-time deferred term loan in the aggregate principal amount of $1.0 billion. Proceeds from the term loans will be used to pay a portion of the cash consideration payable in connection with the previously announced transaction to reclassify and convert each Class B common share, par $0.01 per share, of the Company (the “Class B Ordinary Shares”) into one Class A ordinary share, par value $0.01 per share, of the Company (the “Class A Common Shares”) and the right to receive
$64.64 in cash, without interest (the “Reclassification”) and to pay the related costs as well as the costs related to the closing of the Credit Agreement. Covenants under the Credit Agreement will terminate on the earliest of the following dates: (i) the date on which the Term Loans are funded in accordance with the terms and conditions of funding set forth in the Credit Agreement (the “Funding Date” ), (ii) June 30, 2023 and (iii) the date on which the Company fails to obtain the required approvals from the shareholders of the Company to effect the Reclassification. The Term Loans will mature no earlier than (a) three years after the Funding Date and (b) December 31, 2025.

Term loans will bear interest, at the option of the Company, at the term SOFR (plus an additional credit spread adjustment of 0.10%) or at the base rate (each, as defined in the credit agreement ) plus (i) in the case of SOFR Term Loans, a margin varying from 0.875% to 1.50% per annum depending on the credit rating of the Company as determined by Standard & Poor’s Financial Services LLC (“S&P”) or Moody’s Investors Service, Inc. (“Moody’s”) and (ii) in the case of base rate term loans, a margin ranging from 0.00% to 0.50% per annum based on the Company’s credit rating, as determined by S&P or Moody’s. Unused commitments under the Credit Agreement will incur a listing fee of 0.10% per annum.

The Credit Agreement also contains certain positive and negative covenants which the Company considers customary for facilities of this type and which are consistent with (i) the Company’s existing Tenth Amended and Restated Revolving Credit Agreement dated April 14, 2022 (the “Revolving Facility”) and (ii) a term loan agreement dated March 26, 2020 (as amended by this Amendment No. 1 to the Term Loan Agreement dated June 10, 2021 and that certain amendments No. 2 to the term loan agreement dated April 14, 2022, as well as the Revolving Facility, the “Existing Facilities”). These clauses include, among other things, restrictions on indebtedness of subsidiaries, additional liens, mergers and consolidations, transactions with affiliated companies and sale-leaseback transactions, in each case subject to numerous conditions, exceptions and thresholds. Consistent with existing facilities, the credit agreement also requires the company to maintain a minimum consolidated interest coverage ratio (as defined in the credit agreement) of 2.50:1.00 at the end of each fiscal quarter and a maximum consolidated net leverage ratio (as defined in the Credit Agreement and which will be calculated net up to $750 million unrestricted cash and cash equivalents) of 4.00:1:00 with an increase to 4.50:1.00 with respect to the four fiscal quarters following a material acquisition (as defined in the credit agreement) . The Credit Agreement also contains certain events of default consistent with existing facilities. Upon the occurrence of an event of default after any applicable grace or remediation period, any outstanding loan under the Credit Agreement may be accelerated and/or the Lenders’ commitments under the Credit Agreement may be terminated.

Certain of the Credit Agreement Lenders, the Administrative Agent and their affiliates have provided, and may in the future provide, various commercial banking, investment banking, lending, underwriting and brokerage services, and other financial and advisory services for the Company and its affiliates for which they have received and will receive customary fees and expenses. The company


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and certain of its subsidiaries have, and may in the future, enter into derivative agreements with certain of the credit agreement lenders and their affiliates. In addition, one of the lenders to the Credit Agreement is the trustee under an indenture for certain of the Company’s outstanding notes. Certain of the Credit Agreement Lenders or their Affiliates and Administrative Agent Affiliates are lenders under certain Credit Facilities to investment vehicles controlled by members of the Sands family who are, in some cases, affiliates of the Company. These credit facilities are secured by pledges of Class A common stock, Class B common stock, or a combination thereof and other credit support from certain members of the Sands family.

The foregoing description of the Credit Agreement is a summary, does not purport to be complete, and is qualified in its entirety by reference to the Credit Agreement, a copy of which is filed as Schedule 4.1 to this Form Report. 8-K and incorporated herein by reference.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under

an off-balance sheet arrangement of a registrant.

The Company entered into the Credit Agreement on the Effective Date. See Section 1.01 which is incorporated herein by reference.

Important additional information

This current report on Form 8-K does not constitute an offer to sell or the solicitation of an offer to buy securities or a solicitation to vote or approve and there will be no sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction. No offer of securities will be made except by means of a prospectus satisfying the requirements of Section 10 of the Securities Act of 1933, as amended. Constellation filed with the Security and Exchange Commission (the “SEC”) a registration statement on Form S-4, which contains a preliminary proxy statement/prospectus in connection with the proposed reclassification. SHAREHOLDERS OF CONSTELLATION ARE INVITED TO READ THE PROXY CIRCULAR/PROSPECTUS AND OTHER DOCUMENTS THAT HAVE BEEN AND WILL BE FILED WITH THE SECOND (INCLUDING, WHERE AVAILABLE, THE PROXY STATEMENT/PROSPECTUS) CAREFULLY AND IN THEIR ENTIRETY AS THEY CONTAIN, OR WILL CONTAIN, IMPORTANT INFORMATION WHEN FILED. Shareholders may obtain a free copy of the preliminary proxy statement/prospectus (and of the definitive proxy statement/prospectus, if applicable), as well as other documents containing information about Constellation, free of charge, to DRY www.sec.gov, and on Constellation’s Investor Relations website at https://ir.cbrands.com.

Participants in the solicitation

The directors and officers of Constellation and other persons may be considered participants in the solicitation of proxies from shareholders in connection with the proposed transaction. Information concerning persons who may, under the rules of the SECOND, to be considered participants in the solicitation of proxies from shareholders in connection with the proposed transaction, including a description of their respective direct or indirect interests, by holding securities or otherwise, is included in the proxy statement of proxies/preliminary prospectus described above. Additional information regarding Constellation’s directors and executive officers is available in Constellation’s most recent management proxy circular, dated May 27, 2022for the annual meeting of shareholders held on July 19, 2022which was filed with the SECOND on June 2, 2022Constellation’s current report on Form 8-K filed with the SECOND on July 22, 2022and Constellation’s other deposits with the SECOND. Further information regarding the participants in the proxy solicitation and a description of their direct and indirect interests is contained in the proxy statement/preliminary prospectus.

Item 9.01 Financial statements and supporting documents.

For exhibits filed herewith, see the exhibit index immediately following.


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