Exhibit 10.1
Execution Version
AMENDMENT AND EXTENSION AGREEMENT
This Amendment and Extension to the Credit Agreement (this “Agreement”), dated as of 25 January 2023, among PHILIP MORRIS INTERNATIONAL INC., a Virginia corporation (“PMI”), the financial institutions and other institutional lenders from time to time parties to the Credit Agreement referred to below that have agreed to extend their commitments (the “Extending Lenders”), BANK OF CHINA (EUROPE) S.A., as a new lender (“Bank of China”), WELLS FARGO BANK, N.A., LONDON BRANCH, as a new lender (“Wells Fargo”), CREDIT SUISSE (SWITZERLAND) LTD., as a new lender (“CS” and, together with Bank of China and Wells Fargo, the “New Lenders” and, together with the Extending Lenders, the “Lenders”), and CITIBANK EUROPE PLC, UK BRANCH (legal successor to Citibank International Limited), as Administrative Agent.
WHEREAS, PMI, the Extending Lenders and the Administrative Agent are parties to that certain Credit Agreement relating to the Revolving Credit Facility, dated as of 12 February 2013 (as amended or modified from time to time, the “Credit Agreement”);
WHEREAS, PMI, the Extending Lenders and the Administrative Agent desire to extend the term of the Credit Agreement and to amend certain provisions under the Credit Agreement; and
WHEREAS, each New Lender, which is not an existing lender, has agreed to become a lender under the Credit Agreement, as amended and extended hereby, and provide a Commitment as set forth in Schedule 4 (Commitments) attached hereto on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises set forth above and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
1.Definitions. Capitalized terms used and not defined in this Agreement shall have the respective meanings given them in the Credit Agreement.
2.Extension. Each of the undersigned Extending Lenders hereby agrees to extend, effective 31 January 2023, its Commitment as set forth in Schedule 4 (Commitments) attached hereto and extend the Maturity Date under the Credit Agreement, for a 364-day period to 30 January 2024 pursuant to Section 2.19 of the Credit Agreement.
3.Amendment to Credit Agreement.
(a)(i) The Credit Agreement is hereby amended by amending and restating the definition of “Term SOFR Adjustment” in its entirety as follows:
“Term SOFR Adjustment” means with respect to any Term SOFR, (i) 0.10% (10 basis points) for an Interest Period of one-month’s duration, (ii) 0.10% (10 basis points) for an Interest Period of three-month’s duration and (iii) 0.25% (25 basis points) for an Interest Period of six-month’s duration.
(ii) The Credit Agreement is hereby amended by amending and restating the definition of “Term SOFR” in its entirety as follows:
“Term SOFR” means for any calculation with respect to a Term SOFR Advance, the Term SOFR Reference Rate for a tenor comparable to the applicable Interest Period on the day (such day, the “Periodic Term SOFR Determination Day”) that is two U.S. Government Securities Business Days prior to the first day of such Interest Period, as such rate is published by the Term SOFR Administrator and rounded to five decimal places; provided, however, that if as of 5:00 P.M. (New York City time) on any Periodic Term SOFR Determination Day the Term SOFR Reference Rate for the applicable tenor has not been published by the Term SOFR Administrator and a Benchmark Replacement Date with respect to the Term SOFR Reference Rate has not occurred, then Term SOFR will be the Term SOFR Reference Rate for such tenor as published by the Term SOFR Administrator on the first preceding U.S. Government Securities Business Day for which such Term SOFR Reference Rate for such tenor was published by the Term SOFR Administrator so long as such first preceding U.S. Government Securities Business Day is not more than three U.S. Government Securities Business Days prior to such Periodic Term SOFR Determination Day in each case.
(b)Schedule 4 (Commitments) is hereby deleted in its entirety and is replaced with Schedule 4 (Commitments) attached hereto.
Except as expressly provided hereby, all of the terms and provisions of the Credit Agreement are and shall remain in full force and effect and are hereby ratified and confirmed.
4.Joinder to Credit Agreement.
(a)Each New Lender hereby agrees to become a party to the Credit Agreement as amended and extended hereby and provide a Commitment as set forth in Schedule 4 (Commitments) attached hereto on the terms and conditions set forth herein.
(b)Each New Lender (i) represents and warrants that (A) it has full power and authority, and has taken all action necessary, to execute and deliver this Agreement and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, and (B) (x) the source of any funds it is using to make any Advance is not and will not be plan assets as defined under the regulations of the Department of Labor of any Plan subject to Title I of ERISA or Section 4975 of the Code or (y) the assignment or Advance is not and will not be a non-exempt prohibited transaction as defined in Section 406 of ERISA; (ii) confirms that it has received a copy of the Credit Agreement, together with copies of the financial statements referred to in Section 4.1(e) thereof and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Agreement; (iii) agrees that it will, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement; (iv) appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers and discretion under the Credit Agreement as are delegated to the
Administrative Agent by the terms thereof, together with such powers and discretion as are reasonably incidental thereto.
(c)Pursuant to the terms hereof, each New Lender shall (i) be a party to the Credit Agreement, (ii) be a Lender for all purposes of the Credit Agreement, (iii) perform in accordance with their terms all of the obligations that by the terms of the Credit Agreement are required to be performed by it as a Lender under the Credit Agreement; and (iv) have the rights and obligations of a Lender under the Credit Agreement.
(d)The applicable address, facsimile number and electronic mail address of each New Lender for purposes of Section 9.2 of the Credit Agreement are as set forth in such New Lender’s administrative questionnaire delivered by such New Lender to the Administrative Agent on or before the date hereof or to such other address, facsimile number and electronic mail address as shall be designated by such New Lender in a notice to the Administrative Agent.
5.Concerning Commitments. Each Person whose name appears on Schedule 4 (Commitments) attached hereto acknowledges and agrees that, on and as of the effective date of this Agreement, such Person shall be a Lender under the Credit Agreement as amended hereby (including as to the extension of the Maturity Date provided for hereunder) and shall have a Commitment as set forth next to the name of such Person on Schedule 4 (Commitments) attached hereto. Each party hereto acknowledges and agrees that, on and as of the effective date of this Agreement, Schedule 4 (Commitments) attached hereto sets forth all the Commitments of all the Lenders.
6.Limited Effect. Except as expressly provided hereby, all of the terms and provisions of the Credit Agreement and other related documents are and shall remain in full force and effect and are hereby ratified and confirmed. The amendments contained herein shall not be construed as a waiver or amendment of any other provision of the Credit Agreement or other related documents or for any purpose except as expressly set forth herein.
7.Effective Date. This Agreement shall become effective on 31 January 2023.
8.Condition Precedent. On or prior to the date hereof, the Administrative Agent shall have received this Agreement, duly executed and delivered by PMI and the Lenders.
9.Representations and Warranties. PMI represents and warrants to the Administrative Agent and to each of the Lenders that the statements in subsections (a), (b), (c), (d) and (f) (but only clause (i) thereof) of Section 4.1 of the Credit Agreement are true and correct on and as of the date hereof.
10.Headings. Section headings included herein are for convenience of reference only and shall not constitute a part of this Agreement for any other purpose or be given any substantive effect.
11.Binding Effect. This Agreement shall be binding upon and inure to the benefit of PMI, the Administrative Agent and each Lender, and each of their respective successors and assigns.
12.Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York.
13.Execution in Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Agreement in .PDF format or by facsimile shall be effective as delivery of a manually executed counterpart of this Agreement.
[SIGNATURE PAGES FOLLOW]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written.
PHILIP MORRIS INTERNATIONAL INC.
By: /s/ FRANK DE ROOIJ
Name: Frank de Rooij
Title: Vice President
Treasury and Corporate Finance
Signature page - Amendment and Extension Agreement
CITIBANK EUROPE PLC, UK BRANCH,
as Administrative Agent
By: /s/ ALESSANDRA TORIO SCAGLIA
Name: Alessandra Torio Scaglia
Title: Vice President
Signature page – Amendment and Extension Agreement
CITIBANK, N.A., as Extending Lender
By: /s/ ANDREW MASON
Name: Andrew Mason
Title: Managing Director
Signature page - Amendment and Extension Agreement
BANCO BILBAO VIZCAYA ARGENTARIA, S.A. NEW YORK BRANCH, as Extending Lender
By: /s/ CARA YOUNGER
Name: Cara Younger
Title: Managing Director
By: /s/ ARMEN SEMIZIAN
Name: Armen Semizian
Title: E Director
Signature page - Amendment and Extension Agreement
BANCO SANTANDER, S.A., NEW YORK BRANCH, as Extending Lender
By: /s/ ANDRES BARBOSA
Name: Andres Barbosa
Title: Managing Director
By: /s/ ARTURO PRIETO
Name: Arturo Prieto
Title: Managing Director
Signature page - Amendment and Extension Agreement
BANK OF AMERICA, N.A., as Extending Lender
By: /s/ ALBERT WHEELER
Name: Albert Wheeler
Title: Vice President
Signature page - Amendment and Extension Agreement
BANK OF CHINA (EUROPE) S.A., as New Lender
By: /s/ GUO ZHIYAO
Name: GUO Zhiyao
Title: Deputy General Manager
Signature page - Amendment and Extension Agreement
BARCLAYS BANK PLC, as Extending Lender
By: /s/ CHRIS BICHENO
Name: Chris Bicheno
Title: Vice President
Signature page - Amendment and Extension Agreement
COMMERZBANK AG, NEW YORK BRANCH as Extending Lender
By: /s/ PEDRO BELL
Name: Pedro Bell
Title: Managing Director
By: /s/ ROBERT SULLIVAN
Name: Robert Sullivan
Title: Vice President
\
Signature page - Amendment and Extension Agreement
CREDIT SUISSE (SWITZERLAND) LTD., as New Lender
By: /s/ URSULA SCHWARZENBERGER
Name: Ursula Schwarzenberger
Title: Authorised Signatory
By: /s/ CHRISTOPH BISCHOFBERGER
Name: Christoph Bischofberger
Title: Authorised Signatory
Signature page - Amendment and Extension Agreement
DEUTSCHE BANK AG NEW YORK BRANCH, as Extending Lender
By: /s/ MING K. CHU
Name: Ming K. Chu
Title: Director
By: /s/ ANNIE CHUNG
Name: Annie Chung
Title: Director
Signature page - Amendment and Extension Agreement
GOLDMAN SACHS BANK USA, as Extending Lender
By: /s/ JOSHUA ELLIS-JONES
Name: Joshua Ellis-Jones
Title: Authorised Signatory
Signature page - Amendment and Extension Agreement
HSBC BANK PLC, as Extending Lender
By: /s/ ROD STOYLE
Name: Rod Stoyle
Title: Vice President
Signature page - Amendment and Extension Agreement
MIZUHO BANK, LTD., as Extending Lender
By: /s/ JOHN DAVIES
Name: John Davies
Title: Authorized Signatory
Signature page - Amendment and Extension Agreement
STANDARD CHARTERED BANK, as Extending Lender
By: /s/ SIMON DERRICK
Name: Simon Derrick
Title: Managing Director
Signature page - Amendment and Extension Agreement
SUMITOMO MITSUI BANKING CORPORATION, as Extending Lender
By: /s/ MICHAEL OELLERS
Name: Michael Oellers
Title: Managing Director
By: /s/ DR. HARALD WIMMER
Name: Dr. Harald Wimmer
Title: Executive Director
Signature page - Amendment and Extension Agreement
WELLS FARGO BANK, N.A., LONDON BRANCH, as New Lender
By: /s/ JONATHAN CHILDS
Name: Jonathan Childs
Title: Director
Signature page - Amendment and Extension Agreement
UBS SWITZERLAND AG, as Extending Lender
By: /s/ ALEXANDRE ROERHOLT
Name: Alexandre Roerholt
Title: Managing Director
By: /s/ CHANTAL-CLAIRE SCHMIDLI
Name: Chantal-Claire Schmidli
Title: Authorized Officer
Signature page - Amendment and Extension Agreement
| | | | | | | | | | | | | | |
| PRESS RELEASE | | |
| | | | |
| Investor Relations: | | Media: David Fraser | | |
| Stamford: +1 (917) 663 2233 | | Lausanne: +41 (0)58 242 4500 | | |
| Lausanne: +41 (0)58 242 4666 | | Email: David.Fraser@pmi.com | | |
| Email: InvestorRelations@pmi.com | | | | |
PHILIP MORRIS INTERNATIONAL INC. (PMI) ANNOUNCES AGREEMENT TO EXTEND AND DEEPEN COLLABORATION WITH KT&G
AGREEMENT PROVIDES LONG-TERM EXCLUSIVE RIGHTS FOR PMI TO COMMERCIALIZE KT&G’S INNOVATIVE SMOKE-FREE PRODUCTS OUTSIDE SOUTH KOREA
PMI AND KT&G CALL ON REGULATORS IN KOREA AND AROUND THE WORLD TO LEVERAGE BETTER ALTERNATIVES TO CIGARETTES TO REDUCE CIGARETTE USE
LAUSANNE, January 30, 2023 – Philip Morris International Inc. (PMI) (NYSE: PM) today announces a long-term collaboration with KT&G, South Korea’s leading tobacco and nicotine manufacturer, to continue to commercialize KT&G’s innovative smoke-free devices and consumables on an exclusive, worldwide basis (excluding South Korea). It builds on three years of successful collaboration that has seen PMI commercialize KT&G’s products in more than 30 markets.
The agreement covers fifteen years, to January 29, 2038, with performance-review cycles and associated commitments, based on volume, to be confirmed for each three-year period, to allow flexibility for evolving market conditions. PMI and KT&G expect these commitments to increase over the full duration of the agreement, starting with a total commitment for the first three-year period equivalent to 16 billion consumables.
“We have been pleased with the success of our cooperation with KT&G so far and believe a long-term collaboration will accelerate the achievement of a smoke-free future. We want everyone who does not quit smoking to switch to a better alternative, for the benefit of their own health, public health, and society at large,” said Jacek Olczak, PMI’s Chief Executive Officer.
“We will achieve a smoke-free future faster if all people who smoke have access to better alternatives and accurate information about these innovative products. Together with KT&G we are calling on regulators, scientists and health professionals everywhere, including in Korea, to embrace the potential of these technological innovations to shift smokers away from cigarettes.”
“Since we began our transformation, millions of smokers have switched to our smoke-free products and quit cigarettes entirely. KT&G’s lil products play a complementary role to IQOS, the world’s leading heat-not-burn product, and our continued collaboration will provide adult smokers around the world with more options to leave cigarettes behind. Korea is a global leader in science and innovation, and today marks an important milestone that clears the path for
a better future. With KT&G’s technology and speed of innovation and PMI’s science and commercial infrastructure, we believe our partnership will accelerate our shared vision of a smoke free future.”
The agreement gives PMI continued exclusive access to KT&G’s smoke-free brands and product-innovation pipeline, including offerings for low- and middle-income markets, that will enhance PMI’s existing portfolio of smoke-free products. It gives KT&G continued access to PMI’s global commercial infrastructure and experience commercializing smoke-free products to support the further expansion of KT&G’s smoke-free business outside South Korea.
Products sold under the agreement will be subject to assessment to ensure they meet the regulatory requirements in the markets where they are launched, as well as PMI’s high standards of quality and scientific substantiation. PMI and KT&G will seek any necessary regulatory approvals that may be required on a market-by-market basis.
Forward-Looking and Cautionary Statements
This press release contains projections of future results and goals and other forward-looking statements, including statements regarding business plans and strategies. Achievement of future results is subject to risks, uncertainties and inaccurate assumptions. In the event that risks or uncertainties materialize, or underlying assumptions prove inaccurate, actual results could vary materially from those contained in such forward-looking statements. Pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, PMI is identifying important factors that, individually or in the aggregate, could cause actual results and outcomes to differ materially from those contained in any forward-looking statements made by PMI.
PMI's business risks include: excise tax increases and discriminatory tax structures; increasing marketing and regulatory restrictions that could reduce our competitiveness, eliminate our ability to communicate with adult consumers, or ban certain of our products in certain markets or countries; health concerns relating to the use of tobacco and other nicotine-containing products and exposure to environmental tobacco smoke; litigation related to tobacco use and intellectual property; intense competition; the effects of global and individual country economic, regulatory and political developments, natural disasters and conflicts; the impact and consequences of Russia's invasion of Ukraine; changes in adult smoker behavior; the impact of COVID-19 on PMI's business; lost revenues as a result of counterfeiting, contraband and cross-border purchases; governmental investigations; unfavorable currency exchange rates and currency devaluations, and limitations on the ability to repatriate funds; adverse changes in applicable corporate tax laws; adverse changes in the cost, availability, and quality of tobacco and other agricultural products and raw materials, as well as components and materials for our electronic devices; and the integrity of its information systems and effectiveness of its data privacy policies. PMI's future profitability may also be adversely affected should it be unsuccessful in its attempts to produce and commercialize reduced-risk products or if regulation or taxation do not differentiate between such products and cigarettes; if it is unable to successfully introduce new products, promote brand equity, enter new markets or improve its margins through increased prices and productivity gains; if it is unable to expand its brand portfolio internally or through acquisitions and the development of strategic business relationships; or if it is unable to attract and retain the best global talent, including women or diverse candidates. Future results are also subject to the lower predictability of our reduced-risk product category's performance.
In addition, important factors that could cause actual results to differ materially from those indicated by forward-looking statements include risks and uncertainties related to: the agreement with Altria Group, Inc., and the benefits of the transaction; the possibility that expected benefits related to recent or pending acquisitions, including the
transaction with Swedish Match, may not materialize as expected; Swedish Match’s business experiencing disruptions due to transaction-related uncertainty or other factors making it more difficult to maintain relationships with employees, customers, licensees, other business partners or governmental entities; difficulty retaining key Swedish Match employees; the outcome of any legal proceedings related to the transaction with Swedish Match; and the parties being unable to successfully implement integration strategies or to achieve expected synergies and operating efficiencies within the expected time-frames or at all.
PMI is further subject to other risks detailed from time to time in its publicly filed documents, including PMI's Annual Report on Form 10-K for the fourth quarter and year ended December 31, 2021, and the Form 10-Q for the quarter ended September 30, 2022. PMI cautions that the foregoing list of important factors is not a complete discussion of all potential risks and uncertainties. PMI does not undertake to update any forward-looking statement that it may make from time to time, except in the normal course of its public disclosure obligations.
Philip Morris International: Delivering a Smoke-Free Future
Philip Morris International (PMI) is a leading international tobacco company working to deliver a smoke-free future and evolving its portfolio for the long term to include products outside of the tobacco and nicotine sector. The company’s current product portfolio primarily consists of cigarettes and smoke-free products, including heat-not-burn, vapor and oral nicotine products, which are sold in markets outside the U.S. Since 2008, PMI has invested more than USD 9 billion to develop, scientifically substantiate and commercialize innovative smoke-free products for adults who would otherwise continue to smoke, with the goal of completely ending the sale of cigarettes. This includes the building of world-class scientific assessment capabilities, notably in the areas of pre-clinical systems toxicology, clinical and behavioral research, as well as post-market studies. The U.S. Food and Drug Administration (FDA) has authorized the marketing of versions of PMI’s IQOS Platform 1 devices and consumables as Modified Risk Tobacco Products (MRTPs), finding that exposure modification orders for these products are appropriate to promote the public health. As of September 30, 2022, excluding Russia and Ukraine, PMI's smoke-free products were available for sale in 70 markets, and PMI estimates that approximately 13.5 million adults around the world had already switched to IQOS and stopped smoking. With a strong foundation and significant expertise in life sciences, in February 2021, PMI announced its ambition to expand into wellness and healthcare areas and deliver innovative products and solutions that aim to address unmet consumer and patient needs. For more information, please visit www.pmi.com and www.pmiscience.com.
