Constellation Brands Inc.STZ has announced the amendment to its senior credit facility. This extension coupled with the company's strong cash flow is expected will enhance its financial flexibility.
It is to be noted that Constellation Brands' revolving credit facility has been hiked by $300 million to $1.15 billion. Additionally, a new $1.27 billion U.S. Term A loan facility has been created by combining the existing U.S. Term A and Term A-2 loan facilities which have been increased by the tune of $200 million. Also, the existing European Term A loan and European Term B-1 loan facilities has been merged to form a new European Term A loan facility of $1.43 billion.
The amended facilities are slated to mature in Jul 16, 2020. The maturity of the U.S. Term A-1 loan facility has been extended to Jul 16, 2021, though its amount of $241.9 million remains the same.
Apart from enjoying higher borrowing capacity and extended term, the company can also avail lower interest rate.
The company which share space with Ambev S.A. ABEV , intends to use the proceeds from the increase in the U.S. Term A loan facility to fund a fraction of the upcoming Meiomi wine brand acquisition. On the other hand, the new revolving credit facility currently remains unused.
Constellation Brands currently carries a Zacks Rank #2 (Buy). Other favorably placed stocks in the same industry include Castle Brands Inc. ROX and Molson Coors Brewing Company TAP . Both stocks carry a Zacks Rank #2.