Snapple 2008 Annual Report Download - page 64

Financing Arrangements
On March 10, 2008, we entered into arrangements with a group of lenders to provide us with an aggregate of
$4.4 billion of financing consisting of a term loan A facility, a revolving credit facility and a bridge loan facility.
On April 11, 2008, these arrangements were amended and restated. The amended and restated arrangements
consist of a $2.7 billion senior unsecured credit agreement that provides a $2.2 billion term loan A facility and a
$500 million revolving credit facility (collectively, the “senior unsecured credit facility”) and a 364-day bridge
credit agreement that provided a $1.7 billion bridge loan facility.
Bridge Loan Facility
On April 11, 2008, we borrowed $1.7 billion under the bridge loan facility to reduce financing risks and
facilitate Cadbury’s separation of us. All of the proceeds from the borrowings were placed into interest-bearing
collateral accounts. On April 30, 2008, borrowings under the bridge loan facility were released from the collateral
account containing such funds and returned to the lenders and the 364-day bridge loan facility was terminated.
Upon the termination of the bridge loan facility, we expensed $21 million of financing fees associated with the
facility. Additionally, we incurred $5 million of interest expense on the bridge loan facility and earned $2 million of
interest income on the bridge loan while in escrow.
Senior Unsecured Credit Facility
We borrowed $2.2 billion under the term loan A facility. We made mandatory repayments toward the principal
of $165 million and optional prepayments toward the principal of $230 million for the year ended December 31,
2008.
We are required to pay annual amortization in equal quarterly installments on the aggregate principal amount
of the term loan A equal to: (i) 10% , or $220 million, per year for installments due in the first and second years
following the initial date of funding, (ii) 15%, or $330 million, per year for installments due in the third and fourth
years following the initial date of funding, and (iii) 50%, or $1.1 billion, for installments due in the fifth year
following the initial date of funding. Because of prepayments made during 2008, we have no required principal
payments due in 2009.
The revolving credit facility has an aggregate principal amount of $500 million with a maturity in 2013. The
revolving credit facility was undrawn as of December 31, 2008, except to the extent utilized by letters of credit. Up
to $75 million of the revolving credit facility is available for the issuance of letters of credit, of which $38 million
was utilized as of December 31, 2008. Principal amounts outstanding under the revolving credit facility are due and
payable in full at maturity. We may use borrowings under the revolving credit facility for working capital and
general corporate purposes.
The senior unsecured credit facility requires us to comply with a maximum total leverage ratio covenant and a
minimum interest coverage ratio covenant, as defined in the credit agreement. The senior unsecured credit facility
also contains certain usual and customary representations and warranties, affirmative covenants and events of
default. As of December 31, 2008, we were in compliance with all covenant requirements. Based on our current and
anticipated level of operations, we expect to be in compliance with all covenant requirements in the near and long
term.
Senior Unsecured Notes
We completed the issuance of $1.7 billion aggregate principal amount of senior unsecured notes consisting of
$250 million aggregate principal amount of 6.12% senior notes due 2013, $1.2 billion aggregate principal amount
of 6.82% senior notes due 2018, and $250 million aggregate principal amount of 7.45% senior notes due 2038. The
weighted average interest cost of the senior unsecured notes is 6.8%. Interest on the senior unsecured notes is
payable semi-annually on May 1 and November 1 and is subject to adjustment as defined.
The indenture governing the notes, among other things, limits our ability to incur indebtedness secured by
principal properties, to incur certain sale and lease back transactions and to enter into certain mergers or transfers of
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