Item 1.01
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Entry into a Material Definitive Agreement.
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Revolving Credit Facilities
On October 25, 2017, Starbucks Corporation (the
Company
) entered into a $2.0 billion Credit Agreement and a
$1.0 billion
364-Day
Credit Agreement.
The $2.0 billion Credit Agreement (the
Five-Year Credit Agreement
) was entered into by and among the Company, as borrower, and Bank of America, N.A., in its capacity as Administrative Agent, Swing Line Lender and L/C Issuer, Wells Fargo Bank, N.A., Citibank, N.A. and
U.S. Bank National Association, as
Co-Syndication
Agents and L/C Issuers, JPMorgan Chase Bank, N.A., The Bank of Nova Scotia and Morgan Stanley MUFG Loan Partners, LLC, as
Co-Documentation
Agents, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Wells Fargo Securities, LLC, Citigroup Global Markets Inc. and U.S. Bank National Association, as Joint Lead Arrangers and
Joint Book Managers, and each of the other Lenders a party thereto.
The Five-Year Credit Agreement provides for a $2,000,000,000
unsecured, revolving credit facility (of which $150,000,000 may be used for the issuances of letters of credit) and is scheduled to mature on October 25, 2022. Provided there is no default, the Company may, from time to time, request an
increase from the lenders in the aggregate commitments by an amount not exceeding $500,000,000 for a total aggregate facility commitment not to exceed $2,500,000,000.
Borrowings under the Five-Year Credit Agreement will bear interest at a variable interest rate based on LIBOR, and, for
U.S. Dollar-denominated loans under certain circumstances, a Base Rate, in each case plus an applicable margin. The applicable margin is based on the better of (i) the Companys long-term credit ratings assigned by Moodys and
Standard & Poors rating agencies, and (ii) the Companys fixed charge coverage ratio, pursuant to a pricing grid set forth in the Five-Year Credit Agreement. The current applicable margin is 0.565% for Eurocurrency Rate
Loans and 0.00% for Base Rate Loans. During an event of default under the Five-Year Credit Agreement, interest on the outstanding amount of the indebtedness under the Five-Year Credit Agreement will bear interest at a rate per annum equal to 2% in
excess of the interest then borne by such borrowings.
The $1.0 billion
364-Day
Credit
Agreement (the
364-Day
Credit Agreement
and together with the Five-Year Credit Agreement, the
Credit Agreements
) was entered into by and among the Company, as borrower,
and Bank of America, N.A., in its capacity as Administrative Agent and Swing Line Lender, Wells Fargo Bank, N.A., Citibank, N.A. and U.S. Bank National Association, as
Co-Syndication
Agents, JPMorgan Chase
Bank, N.A., The Bank of Nova Scotia and Morgan Stanley MUFG Loan Partners, LLC, as
Co-Documentation
Agents, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Wells Fargo Securities, LLC, Citigroup
Global Markets Inc. and U.S. Bank National Association, as Joint Lead Arrangers and Joint Book Managers, and each of the other Lenders a party thereto. The Credit Agreements replaced the 2015 Credit Agreement (as defined in Item 1.02 below), which
was terminated concurrently with entering into the Credit Agreements.
The
364-Day
Credit
Agreement provides for a $1,000,000,000 unsecured, revolving credit facility and is scheduled to mature on October 24, 2018. Provided there is no default, the Company may, from time to time, request an increase from the lenders in the aggregate
commitments by an amount not exceeding $500,000,000 for a total aggregate facility commitment not to exceed $1,500,000,000.
Borrowings
under the
364-Day
Credit Agreement will bear interest at a variable interest rate based on LIBOR, and, for U.S. Dollar-denominated loans under certain circumstances, a Base Rate, in each case plus an
applicable margin. The applicable margin is 0.585% for Eurocurrency Rate Loans and 0.00% for Base Rate Loans. During an event of default under the
364-Day
Credit Agreement, interest on the outstanding amount
of the indebtedness under the
364-Day
Credit Agreement will bear interest at a rate per annum equal to 2% in excess of the interest then borne by such borrowings.
The Credit Agreements contain provisions requiring the Company to maintain compliance with certain covenants, including a minimum fixed charge
coverage ratio of 2.50 to 1. The Credit Agreements also contain
certain customary events of default, including
non-payment
of principal, interest or fees, violation of covenants, cross default to certain other
indebtedness, invalidity of any loan document, material judgments, bankruptcy and insolvency events, and change of control, subject, in certain instances, to cure periods. Upon the occurrence of an event of default, the lenders may elect to declare
amounts outstanding under the Credit Agreements immediately due and payable.
In the ordinary course of their respective businesses, the
lenders under the Credit Agreements and their affiliates have engaged, and may in the future engage, in commercial banking and/or investment banking transactions with the Company and its affiliates.
Copies of the Five-Year Credit Agreement and
364-Day
Credit Agreement are attached to this report as
Exhibits 10.1 and 10.2, respectively, and are incorporated herein by reference as though they were fully set forth herein. The description above is a summary of the Credit Agreements, does not provide a complete description of the Credit Agreements,
and is qualified in its entirety by the complete text of the Credit Agreements themselves.
Item 1.02
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Termination of a Material Definitive Agreement.
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On October 25, 2017, in connection
with the Companys entry into the Credit Agreements discussed in Item 1.01, the Company terminated the Credit Agreement, dated November 6, 2015 (the
2015 Credit Agreement
), among the Company, as borrower, Bank of
America, N.A., in its capacity as Administrative Agent, Swing Line Lender and L/C Issuer, Wells Fargo Bank, N.A. and Citibank, N.A. as
Co-Syndication
Agents and L/C Issuers, Goldman Sachs Bank USA, JPMorgan
Chase Bank, N.A., The Bank of Nova Scotia, U.S. Bank National Association and Morgan Stanley MUFG Loan Partners, LLC, as
Co-Documentation
Agents, Merrill Lynch, Pierce, Fenner & Smith Incorporated,
Wells Fargo Securities, LLC, and Citigroup Global Markets Inc. as Joint Lead Arrangers and Joint Book Managers, and each of the other Lenders a party thereto.