Terms Agreement dated April 29, 2020 (incorporating the PepsiCo, Inc. Underwriting Agreement Standard Provisions dated as of November 18, 2019) among PepsiCo and the several underwriters named therein
Exhibit 1.1
PEPSICO, INC.
0.250% Senior Notes due 2024
0.500% Senior Notes due 2028
TERMS AGREEMENT
April 29, 2020
| To: | PepsiCo, Inc. 700 Anderson Hill Road Purchase, New York 10577 |
Ladies and Gentlemen:
We understand that PepsiCo, Inc., a North Carolina corporation (the “Company”), proposes to issue and sell €1,000,000,000 of its 0.250% Senior Notes due 2024 (the “2024 Notes”) and €1,000,000,000 of its 0.500% Senior Notes due 2028 (the “2028 Notes,” and together with the 2024 Notes, the “Underwritten Securities”) subject to the terms and conditions stated herein and in the PepsiCo, Inc. Underwriting Agreement Standard Provisions dated as of November 18, 2019 filed with the Securities and Exchange Commission on November 18, 2019 as Exhibit 1.2 to the Company’s Registration Statement on Form S-3 (File No. 333-234767) (the “Standard Provisions”). Each of the applicable provisions in the Standard Provisions (including defined terms) is incorporated herein by reference in its entirety, and shall be deemed to be a part of this Agreement to the same extent as if such provisions had been set forth in full herein. We, the underwriters named below (the “Underwriters”), offer to purchase, severally and not jointly, the amount of Underwritten Securities opposite our names set forth below at a purchase price equal to 99.565% of the principal amount thereof for the 2024 Notes and 99.489% of the principal amount thereof for the 2028 Notes.
| Principal Amount of | ||||||||
| Underwriters | 2024 Notes | 2028 Notes | ||||||
| BNP Paribas | € | 250,000,000 | € | 250,000,000 | ||||
| Deutsche Bank AG, London Branch | 250,000,000 | 250,000,000 | ||||||
| HSBC Bank plc | 250,000,000 | 250,000,000 | ||||||
| Goldman Sachs & Co. LLC | 60,000,000 | 60,000,000 | ||||||
| Mizuho International plc | 60,000,000 | 60,000,000 | ||||||
| Morgan Stanley & Co. International plc | 60,000,000 | 60,000,000 | ||||||
| Banco Bilbao Vizcaya Argentaria, S.A. | 35,000,000 | 35,000,000 | ||||||
| Barclays Bank PLC | 35,000,000 | 35,000,000 | ||||||
| Total | € | 1,000,000,000 | € | 1,000,000,000 | ||||
The Underwriters agree to reimburse the Company for €1,200,000 of its expenses incurred in connection with the offering of the Underwritten Securities; such reimbursement to occur simultaneously with the purchase and sale of the Underwritten Securities at the Closing Time.
Section 9(a)(vii) of the Standard Provisions shall apply to the Underwritten Securities.
Section 9(c), (d) and (e) of the Standard Provisions shall apply to this Agreement. The Stabilizing Manager is HSBC Bank plc. The Manufacturers are BNP Paribas, Deutsche Bank AG, London Branch and HSBC Bank plc.
Section 9(f) of the Standard Provisions shall apply to this Agreement.
For purposes of Section 21 of the Standard Provisions, the identified provisions are: (i) the fifth paragraph of text under the caption “Underwriting” in such preliminary prospectus, Time of Sale Prospectus and the Prospectus; (ii) the fourth sentence of the seventh paragraph of text under the caption “Underwriting” in such preliminary prospectus, Time of Sale Prospectus and the Prospectus; (iii) the eighth paragraph of text under the caption “Underwriting” in such preliminary prospectus, Time of Sale Prospectus and the Prospectus; (iv) the eleventh and twelfth paragraphs of text under the caption “Underwriting” in such preliminary prospectus, Time of Sale Prospectus and the Prospectus; and (v) the second and third full paragraphs of text on page S-2 in such preliminary prospectus, Time of Sale Prospectus and the Prospectus.
The signature of any signatory to this Agreement may be manual or facsimile (including, for the avoidance of doubt, electronic).
2
The Underwritten Securities and the offering thereof shall have the following additional terms:
| Issuer: | PepsiCo, Inc. | |
| Trade Date: | April 29, 2020 | |
| Time of Sale: | 12:25 p.m. New York Time on the Trade Date | |
| Settlement Date (T+5): | May 6, 2020 | |
| Closing Time: | 6:00 a.m. New York Time on the Settlement Date | |
| Closing Location: | New York, New York | |
| Time of Sale Prospectus: | Base prospectus dated November 18, 2019, preliminary prospectus supplement dated April 29, 2020 and free writing prospectus dated April 29, 2020 | |
| Title of Securities: | 0.250% Senior Notes due 2024 | 0.500% Senior Notes due 2028 |
| Aggregate Principal Amount Offered: | €1,000,000,000 | €1,000,000,000 |
| Maturity Date: | May 6, 2024 | May 6, 2028 |
| Interest Payment Dates: | Annually on each May 6, commencing on May 6, 2021 | Annually on each May 6, commencing on May 6, 2021 |
| Benchmark Bund: | OBL#179 0.000% due April 2024 | DBR 0.500% due February 2028 |
| Benchmark Bund Yield: | -0.690% | -0.595% |
| Spread to Benchmark Bund: | +97.4 bps | +110.6 bps |
| Mid-Swap Yield: | -0.296% | -0.169% |
| Spread to Mid-Swap: | +58 bps | +68 bps |
| Coupon: | 0.250% | 0.500% |
| Price to Public (Issue Price): | 99.865% | 99.914% |
| Redemption for Tax Reasons: | The Company may redeem all, but not less than all, of the Underwritten Securities in the event of certain changes in the tax laws of the United States (or any taxing authority in the United States). This redemption would be at a redemption price equal to 100% of the principal amount, together with accrued and unpaid interest on the Underwritten Securities to, but not including, the date fixed for redemption. | |
| Redemption Provisions: | Prior to April 6, 2024, the greater of (i) 100% of the principal amount of the Underwritten Securities being redeemed and (ii) the sum of the present values of the Remaining Scheduled Payments of principal and interest thereon (exclusive of interest accrued to the date of redemption), assuming for such purpose that the 2024 Notes matured on April 6, 2024, discounted to the redemption date on an annual basis (ACTUAL/ACTUAL (ICMA)) at the applicable Comparable Government Bond Rate plus 15 basis points, plus, in each case, accrued and unpaid interest to the date of redemption.
On or after April 6, 2024 (one month prior to the maturity date), at a redemption price equal to 100% of the principal amount of the Underwritten Securities being redeemed, plus accrued and unpaid interest to the date of redemption.
| Prior to February 6, 2028, the greater of (i) 100% of the principal amount of the Underwritten Securities being redeemed and (ii) the sum of the present values of the Remaining Scheduled Payments of principal and interest thereon (exclusive of interest accrued to the date of redemption), assuming for such purpose that the 2028 Notes matured on February 6, 2028, discounted to the redemption date on an annual basis (ACTUAL/ACTUAL (ICMA)) at the applicable Comparable Government Bond Rate plus 20 basis points, plus, in each case, accrued and unpaid interest to the date of redemption.
On or after February 6, 2028 (three months prior to the maturity date), at a redemption price equal to 100% of the principal amount of the Underwritten Securities being redeemed, plus accrued and unpaid interest to the date of redemption.
|
| 3 |
| “Par Call Date” means, with respect to the 2024 Notes, April 6, 2024, the date that is one month prior to the maturity date of such 2024 Notes and, with respect to the 2028 Notes, February 6, 2028, the date that is three months prior to the maturity date of such 2028 Notes.
“Comparable Government Bond Rate” means, with respect to any redemption date, the price, expressed as a percentage (rounded to three decimal places, with 0.0005 being rounded upwards), at which the gross redemption yield on the Underwritten Securities to be redeemed, if they were to be purchased at such price on the third Business Day prior to the date fixed for redemption, would be equal to the gross redemption yield on such Business Day of the Comparable Government Bond (as defined below) on the basis of the middle market price of the Comparable Government Bond prevailing at 11:00 a.m. (London time) on such Business Day as determined by an independent investment bank selected by the Company.
“Comparable Government Bond” means, in relation to any Comparable Government Bond Rate calculation, at the discretion of an independent investment bank selected by the Company, a German government bond whose maturity is closest to the maturity of the Underwritten Securities to be redeemed, assuming for such purpose that the Underwritten Securities matured on the applicable Par Call Date, or if such independent investment bank in its discretion considers that such similar bond is not in issue, such other German government bond as such independent investment bank may, with the advice of three brokers of, and/or market makers in, German government bonds selected by the Company, determine to be appropriate for determining the Comparable Government Bond Rate.
“Remaining Scheduled Payments” means, with respect to each Underwritten Security to be redeemed, the remaining scheduled payments of the principal thereof and interest thereon that would be due after the related redemption date but for such redemption, assuming for such purpose that such Underwritten Security matured on the applicable Par Call Date; provided, however, that, if such redemption date is not an interest payment date with respect to such Underwritten Security, the amount of the next succeeding scheduled interest payment thereon will be deemed to be reduced by the amount of interest accrued thereon to such redemption date.
“Business Day” means any day, other than a Saturday or Sunday, (1) which is not a day on which banking institutions in the City of New York or the City of London are authorized or required by law or executive order to close and (2) on which the Trans-European Automated Real-time Gross Settlement Express Transfer system (the TARGET2 system), or any successor thereto, operates.
| ||
| Net Proceeds to PepsiCo (Before Expenses): | €995,650,000 | €994,890,000 |
| 4 |
| Use of Proceeds: | PepsiCo intends to use the net proceeds from this offering for general corporate purposes, including the repayment of commercial paper. | |
| Day Count Fraction: | ACTUAL/ACTUAL (ICMA) | |
| CUSIP / ISIN / Common Code: | 713448 EW4 / XS2168625460 / 216862546 | 713448 EX2 / XS2168625544 / 216862554 |
| Currency of Payment: | All payments of interest and principal, including payments made upon any redemption of the Underwritten Securities, will be payable in euro. If, on or after the issuance of the Underwritten Securities, the euro is unavailable to the Company due to the imposition of exchange controls or other circumstances beyond the Company’s control or if the euro is no longer being used by the then member states of the European Monetary Union that have adopted the euro as their currency or for the settlement of transactions by public institutions of or within the international banking community, then all payments in respect of the Underwritten Securities will be made in U.S. dollars until the euro is again available to the Company and so used. | |
| Additional Amounts: | The Company will, subject to certain exceptions and limitations, pay as additional interest on the Underwritten Securities such additional amounts as are necessary in order that the net payment by the Company of the principal of and interest on the Underwritten Securities to a holder who is not a United States person, after withholding or deduction for any present or future tax, assessment or other governmental charge imposed by the United States or a taxing authority in the United States, will not be less than the amount provided in the Underwritten Securities then due and payable. | |
| Listing: | The Company intends to apply to list the Underwritten Securities on the Nasdaq Bond Exchange and expects trading in the Underwritten Securities to begin within 30 days after the date of their issuance. | |
| Minimum Denomination: | €100,000 and integral multiples of €1,000 | |
Joint Book-Running Managers: | BNP Paribas Deutsche Bank AG, London Branch HSBC Bank plc | |
| Senior Co-Managers: | Goldman Sachs & Co. LLC Mizuho International plc Morgan Stanley & Co. International plc | |
| Co-Managers: | Banco Bilbao Vizcaya Argentaria, S.A. Barclays Bank PLC | |
| Address for Notices to the Representatives: | BNP Paribas
Deutsche Bank AG, London Branch
HSBC Bank plc | |
5
IN WITNESS WHEREOF, the parties hereto have executed this Terms Agreement as of the date first above written.
| PEPSICO, INC. | ||
| By: | /s/ Hugh F. Johnston | |
| Name: Hugh F. Johnston Title: Executive Vice President and Chief Financial Officer | ||
| By: | /s/ Kenneth Smith | |
| Name: Kenneth Smith Title: Senior Vice President, Finance and Treasurer |
6
CONFIRMED AND ACCEPTED, as of the date first above written:
| By: | HSBC BANK PLC in its capacity as Underwriter and Stabilizing Manager |
| By: | /s/ Samantha Riley | ||
| Name: | Samantha Riley | ||
| Title: | Managing Director | ||
| By: | BNP PARIBAS |
| By: | /s/ Hugh Pryse-Davies | ||
| Name: | Hugh Pryse-Davies | ||
| Title: | Authorized Signatory | ||
| By: | /s/ Benedict Foster | ||
| Name: | Benedict Foster | ||
| Title: | Authorized Signatory | ||
| By: | DEUTSCHE BANK AG, LONDON BRANCH |
| By: | /s/ John Han | ||
| Name: | John Han | ||
| Title: | Managing Director | ||
| By: | /s/ John McCabe | ||
| Name: | John McCabe | ||
| Title: | Managing Director | ||
| By: | GOLDMAN SACHS & CO. LLC |
| By: | /s/ Sam Chaffin | ||
| Name: | Sam Chaffin | ||
| Title: | Vice President | ||
| By: | MIZUHO INTERNATIONAL PLC |
| By: | /s/ Guy Reid | ||
| Name: | Guy Reid | ||
| Title: | Managing Director | ||
7
| By: | MORGAN STANLEY & CO. INTERNATIONAL PLC |
| By: | /s/ Rachel Holdstock | ||
| Name: | Rachel Holdstock | ||
| Title: | Vice President | ||
| By: | BANCO BILBAO VIZCAYA ARGENTARIA, S.A. |
| By: | /s/ Alvaro Solis | ||
| Name: | Alvaro Solis | ||
| Title: | Managing Director | ||
| By: | /s/ Gonzalo Cid-Luna | ||
| Name: | Gonzalo Cid-Luna | ||
| Title: | Executive Director | ||
| By: | BARCLAYS BANK PLC |
| By: | /s/ Emily Wilson | ||
| Name: | Emily Wilson | ||
| Title: | Vice President | ||
8
Schedule I
Time of Sale Prospectus:
| 1. | Preliminary Prospectus dated April 29, 2020 (including the Base Prospectus dated November 18, 2019) |
| 2. | Any free writing prospectuses approved by the Representatives and filed by the Company under Rule 433(d) under the Securities Act |
| 3. | Final Term Sheet dated April 29, 2020 to be filed by the Company pursuant to Rule 433 under the Securities Act setting forth certain terms of the Underwritten Securities |
9
