Kraft 2010 Annual Report Download - page 51

On February 8, 2010, we issued $9.5 billion of senior unsecured notes at a weighted-average effective rate of 5.364% and used the net proceeds ($9,379
million) to finance the Cadbury acquisition and for general corporate purposes. The general terms of the $9.5 billion notes are:
• $3.75 billion total principal notes due February 10, 2020 at a fixed, annual interest rate of 5.375%. Interest is payable semiannually beginning
August 10, 2010.
• $3.00 billion total principal notes due February 9, 2040 at a fixed, annual interest rate of 6.500%. Interest is payable semiannually beginning
August 9, 2010.
• $1.75 billion total principal notes due February 9, 2016 at a fixed, annual interest rate of 4.125%. Interest is payable semiannually beginning
August 9, 2010.
• $1.00 billion total principal notes due May 8, 2013 at a fixed, annual interest rate of 2.625%. Interest is payable semiannually beginning
November 8, 2010.
In addition, these notes include covenants that restrict our ability to incur debt secured by liens above a certain threshold. We also must 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 both of the following occur:
(i) a "change of control" triggering event, and
(ii) a downgrade of these notes below an investment grade rating by each of Moody's Investor Service, Inc., Standard & Poor's Ratings Services and
Fitch, Inc. 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.
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.
These repayments were primarily financed from commercial paper issuances.
The fair value of the long-term debt we acquired as part of our Cadbury acquisition was $2,437 million at February 2, 2010. The acquired debt has the
following terms (including U.S. dollar par amounts):
• £77 million (approximately $123 million) total principal notes due December 20, 2010 at a fixed, annual interest rate of 4.875%.
• C$150 million (approximately $140 million) Canadian bank loan agreement expiring August 30, 2012 at a variable interest rate. The interest rate
at December 31, 2010 was 1.573%.
• $1.00 billion total principal notes due October 1, 2013 at a fixed, annual interest rate of 5.125%.
• £300 million (approximately $478 million) total principal notes due December 11, 2014 at a fixed, annual interest rate of 5.375%.
• £350 million (approximately $558 million) total principal notes due July 18, 2018 at a fixed, annual interest rate of 7.250%.
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. Our Board of Directors has authorized $12.0 billion in general
long-term financing authority. As a well-known seasoned issuer, we plan to file an automatic shelf registration statement on Form S-3 with the SEC shortly
after this Annual Report on Form 10-K is filed with the SEC.
Off-Balance Sheet Arrangements and Aggregate Contractual Obligations
We have no off-balance sheet arrangements other than the guarantees and contractual obligations that are discussed below.
Guarantees:
As discussed in Note 13, Commitments and Contingencies, we have third-party guarantees primarily covering the long-term obligations of our vendors. As
part of those transactions, we guarantee that third parties will make
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