Item 1.01 Entry into a Material Definitive Agreement.
Term Loan Credit Agreement
As previously
reported, on May 7, 2018, International Flavors & Fragrances Inc. (the Company or IFF) entered into an Agreement and Plan of Merger (the Merger Agreement) with Frutarom Industries Ltd., a company
organized under the laws of the State of Israel (Frutarom), and Icon Newco Ltd., a company organized under the laws of the State of Israel and a wholly owned subsidiary of IFF, to acquire Frutarom (the Acquisition).
In connection with the Acquisition, on June 6, 2018, the Company entered into a Term Loan Credit Agreement (the Term Loan Credit Agreement)
among the Company, Morgan Stanley Senior Funding, Inc., as administrative agent (the Term Administrative Agent), and the lenders party thereto (the Term Lenders).
Under the Term Loan Credit Agreement, the Term Lenders have committed to provide, subject to certain conditions, a senior unsecured term loan facility in an
original aggregate principal amount of up to $350 million, maturing three years after the funding date thereunder (the Term Facility).
The Term Facility will bear interest, at the Companys option, at a per annum rate equal to either (x) an adjusted LIBOR rate plus an applicable
margin varying from 0.750% to 2.000% or (y) a base rate plus an applicable margin varying from 0.000% to 1.000%, in each case depending on the public debt ratings for
non-credit
enhanced long-term senior
unsecured debt issued by the Company.
Loans under the Term Facility will amortize quarterly at a per annum rate of 10.0% of the aggregate principal
amount of the loans made under the Term Facility on the funding date, commencing at the end of the first full fiscal quarter after funding, with the balance payable on the third anniversary of the funding date. The Company may voluntarily prepay the
term loans without premium or penalty.
The proceeds of borrowings under the Term Loan Credit Agreement are to be used to (a) finance, in part, the
cash consideration for the Acquisition, (b) refinance certain indebtedness of the Company, Frutarom, and/or their respective subsidiaries in connection with the Acquisition, and (c) pay certain fees and expenses incurred in connection with
the Acquisition.
The Term Loan Credit Agreement contains various covenants, limitations and events of default customary for similar facilities for
similarly rated borrowers, including a maximum ratio of net debt to EBITDA of 4.50x with step-downs over time and a temporary
step-up
to 6.0x for the first full fiscal quarter after funding if the Company has
not issued equity or mandatory convertible securities generating gross proceeds of at least $1.75 billion on or before the closing date of the Acquisition.
The funding of the loans under the Term Loan Credit Agreement is subject to the customary closing conditions set forth therein. The commitments under the Term
Loan Credit Agreement will terminate on the earliest of (i) the consummation of the Acquisition without using the loans under the Term Facility, (ii) the date on which the Merger Agreement is terminated in accordance with its terms without
the closing of the Acquisition, (iii) receipt by the Term Administrative Agent of written notice from the Company of its election to terminate all commitments under the Term Facility in full and (iv) the Termination Date (as defined in the
Merger Agreement as in effect on May 7, 2018) (or, if the Termination Date shall have been extended as provided in Section 7.1(b)(i) of the Merger Agreement as in effect on May 7, 2018, then on such extended Termination Date).
Amendment No. 2 to Revolving Credit Agreement
On June 6, 2018, the Company and certain of its subsidiaries entered into Amendment No. 2 to Credit Agreement (the Amendment) among the
Company, certain of its subsidiaries, Citibank, N.A. as administrative agent and the lenders party thereto, which amended and restated the Credit Agreement, dated as of November 9, 2011, amended and restated as of December 2, 2016 and
amended as of May 21, 2018 among the Company, certain of its subsidiaries, the banks, the financial institutions and other institutional lenders party thereto, and Citibank, N.A. as administrative agent (as so amended and restated, the
Revolving Credit Agreement).
The Revolving Credit Agreement, among other things, provides a five-year $1.0 billion senior unsecured
revolving loan credit facility maturing in five years, consisting of a $585 million tranche A revolving credit facility (which provides for borrowings available in U.S. dollars, euros, Swiss francs, Japanese yen and/or British pounds sterling,
with a sublimit of $25 million for swing line borrowings) (Tranche A) and a $415 million tranche B revolving credit facility (which provides for borrowings available in U.S. dollars, euros, Swiss francs, Japanese yen and/or
British pounds sterling, with sublimits of 50 million and $25 million for swing line borrowings) (Tranche B and, together with Tranche A, the Revolving Facility).
The interest rate on the Revolving Facility will be, at the applicable borrowers option, a per annum rate equal to either (x) an adjusted LIBOR
rate plus an applicable margin varying from 0.750% to 1.750% or (y) a base rate plus an applicable margin varying from 0.000% to 0.750%, in each case depending on the public debt ratings for
non-credit
enhanced long-term senior unsecured debt issued by the Company.
The Revolving Credit Agreement includes various covenants, limitations and events of
default customary for similar facilities for similarly rated borrowers, including a maximum ratio of net debt to EBITDA of (x) prior to the closing date of the Acquisition, 3.50x and (y) commencing on and after the closing date of the
Acquisition, 4.50x with step-downs over time and a temporary
step-up
to 6.0x for the first full fiscal quarter after the closing date of the Acquisition if the Company has not issued equity or mandatory
convertible securities generating gross proceeds of at least $1.75 billion on or before the closing date of the Acquisition.
The lenders and other
financial institutions that are party to the Term Loan Credit Agreement and the Amendment and their respective affiliates engage in financial advisory, investment banking, commercial banking or other transactions of a financial nature with the
Company and its subsidiaries, including the provision of advisory services for which they receive certain fees, expense reimbursements or other payments.
The foregoing description of the Term Loan Credit Agreement and the Amendment are not intended to be complete and are qualified in their entirety by reference
to the Term Loan Credit Agreement and the Amendment, copies of which are attached hereto as Exhibit 10.1 and Exhibit 10.2, respectively, and incorporated herein by reference.