Kraft 2009 Annual Report Download - page 49

to maintain our investment grade debt rating, and our net debt to adjusted EBITDA ratio was 2.64. The Cadbury Bridge Facility agreement also
contains customary representations, covenants and events of default and requires the prepayment of advances and / or the permanent reduction
of commitments under the facility with the net cash proceeds received from certain disposals, debt issuances and equity capital markets
transactions. No amounts were drawn on the facility at December 31, 2009.
Subject to market conditions, we expect to refinance or reduce advances under the Cadbury Bridge Facility from proceeds of alternative financing
sources.
Debt:
Our total debt was $19.0 billion at December 31, 2009 and $20.3 billion at December 31, 2008. Our debt-to-capitalization ratio was 0.42 at
December 31, 2009 and 0.48 at December 31, 2008. At December 31, 2009, the weighted-average term of our outstanding long-term debt was
8.4 years.
On February 8, 2010, we issued $9.5 billion of senior unsecured notes at a weighted-average effective rate of 5.364% and are using the net
proceeds ($9,379 million) to finance the Cadbury acquisition and for general corporate purposes. After the issuance of the $9.5 billion of senior
unsecured notes, the weighted-average term of our outstanding long-term debt was 10.5 years.
On September 3, 2009, we redeemed our November 2011, 7% $200 million debenture at par value. Upon redemption, we recorded a loss of $14
million within interest and other expense, net which represented the write-off of the remaining discount. On November 12, 2009, we repaid $750
million in notes, and on October 1, 2008, we repaid $700 million in notes. These repayments were primarily financed from commercial paper
issuances.
On December 19, 2008, we issued $500 million of senior unsecured notes; on May 22, 2008, we issued $2.0 billion of senior unsecured notes;
and on March 20, 2008, we issued €2.85 billion (approximately $4.5 billion) of senior unsecured notes. We used the net proceeds from these
issuances ($498 million in December, $1,967 million in May and approximately $4,470 million in March) for general corporate purposes, including
the repayment of borrowings under the bridge facility used to fund our LU Biscuit acquisition and other short-term borrowings.
The notes from all above issuances include covenants that restrict our ability to incur debt secured by liens above a certain threshold. We are also
required to offer to purchase these notes at a price equal to 101% of the aggregate principal amount, plus accrued and unpaid interest to the date
of repurchase, if we experience both of the following:
(i) a “change of control” triggering event, and
(ii) a downgrade of these notes below an investment grade rating by each of Moody’s, Standard & Poor’s and Fitch within a specified
period.
We expect to continue to comply with our long-term debt covenants. Refer to Note 7, Debt and Borrowing Arrangements, for further details of
these debt offerings.
From time to time we refinance long-term and short-term debt. The nature and amount of our long-term and short-term debt and the proportionate
amount of each varies as a result of future business requirements, market conditions and other factors. We have an automatic shelf registration on
Form S-3 on file with the SEC. As a well-known seasoned issuer, we are able to register new debt securities in amounts authorized by our Board
of Directors through December 2010. On October 4, 2007 our Board of Directors authorized $5.0 billion in general long-term financing, which was
in addition to the €5.3 billion authorized for the LU Biscuit acquisition and the £7.1 billion authorized for the Cadbury acquisition. At December 31,
2009, we had approximately $3.0 billion remaining in general long-term financing authority and £7.1 billion (approximately $11.5 billion) remaining
in Cadbury financing authority from our Board of Directors.
46
Source: KRAFT FOODS INC, 10-K, February 25, 2010 Powered by Morningstar® Document Research℠