Terms Agreement dated February 13, 2023 (incorporating the PepsiCo, Inc. Underwriting Agreement Standard Provisions dated as of November 18, 2019) among PepsiCo and BofA Securities, Inc., Citigroup Global Markets Inc. and J.P. Morgan Securities LLC as Representatives of the several underwriters named therein
Exhibit 1.1
PEPSICO, INC.
Floating Rate Notes due 2026
4.550% Senior Notes due 2026
4.450% Senior Notes due 2028
4.450% Senior Notes due 2033
4.650% Senior Notes due 2053
TERMS AGREEMENT
February 13, 2023
| 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 $350,000,000 of its Floating Rate Notes due 2026 (the “2026 Floating Rate Notes”), $500,000,000 of its 4.550% Senior Notes due 2026 (the “2026 Notes”), $650,000,000 of its 4.450% Senior Notes due 2028 (the “2028 Notes”), $1,000,000,000 of its 4.450% Senior Notes due 2033 (the “2033 Notes”) and $500,000,000 of its 4.650% Senior Notes due 2053 (the “2053 Notes,” and together with the 2026 Floating Rate Notes, 2026 Notes, 2028 Notes and 2033 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 incorporated by reference to Exhibit 1.2 to the Company’s Registration Statement on Form S-3 (File No. 333-266332) filed with the Securities and Exchange Commission on July 26, 2022 (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 99.775% of the principal amount thereof for the 2026 Floating Rate Notes, 99.717% of the principal amount thereof for the 2026 Notes, 99.516% of the principal amount thereof for the 2028 Notes, 99.414% of the principal amount thereof for the 2033 Notes and 99.061% of the principal amount thereof for the 2053 Notes.
| Principal Amount of | ||||||||||||||||||||
| Underwriters | 2026 Floating Rate Notes | 2026 Notes | 2028 Notes | 2033 Notes | 2053 Notes | |||||||||||||||
| BofA Securities, Inc. | $ | 87,500,000 | $ | 125,000,000 | $ | 162,500,000 | $ | 250,000,000 | $ | 125,000,000 | ||||||||||
| Citigroup Global Markets Inc. | $ | 87,500,000 | $ | 125,000,000 | $ | 162,500,000 | $ | 250,000,000 | $ | 125,000,000 | ||||||||||
| J.P. Morgan Securities LLC | $ | 87,500,000 | $ | 125,000,000 | $ | 162,500,000 | $ | 250,000,000 | $ | 125,000,000 | ||||||||||
| BNP Paribas Securities Corp. | $ | 14,000,000 | $ | 20,000,000 | $ | 26,000,000 | $ | 40,000,000 | $ | 20,000,000 | ||||||||||
| Deutsche Bank Securities Inc. | $ | 14,000,000 | $ | 20,000,000 | $ | 26,000,000 | $ | 40,000,000 | $ | 20,000,000 | ||||||||||
| HSBC Securities (USA) Inc. | $ | 14,000,000 | $ | 20,000,000 | $ | 26,000,000 | $ | 40,000,000 | $ | 20,000,000 | ||||||||||
| BBVA Securities Inc. | $ | 8,750,000 | $ | 12,500,000 | $ | 16,250,000 | $ | 25,000,000 | $ | 12,500,000 | ||||||||||
| TD Securities (USA) LLC | $ | 8,750,000 | $ | 12,500,000 | $ | 16,250,000 | $ | 25,000,000 | $ | 12,500,000 | ||||||||||
| Academy Securities, Inc. | $ | 3,500,000 | $ | 5,000,000 | $ | 6,500,000 | $ | 10,000,000 | $ | 5,000,000 | ||||||||||
| ANZ Securities, Inc. | $ | 3,500,000 | $ | 5,000,000 | $ | 6,500,000 | $ | 10,000,000 | $ | 5,000,000 | ||||||||||
| Cabrera Capital Markets LLC | $ | 3,500,000 | $ | 5,000,000 | $ | 6,500,000 | $ | 10,000,000 | $ | 5,000,000 | ||||||||||
| CastleOak Securities, L.P. | $ | 3,500,000 | $ | 5,000,000 | $ | 6,500,000 | $ | 10,000,000 | $ | 5,000,000 | ||||||||||
| ING Financial Markets LLC | $ | 3,500,000 | $ | 5,000,000 | $ | 6,500,000 | $ | 10,000,000 | $ | 5,000,000 | ||||||||||
| PNC Capital Markets LLC | $ | 3,500,000 | $ | 5,000,000 | $ | 6,500,000 | $ | 10,000,000 | $ | 5,000,000 | ||||||||||
| Siebert Williams Shank & Co., LLC | $ | 3,500,000 | $ | 5,000,000 | $ | 6,500,000 | $ | 10,000,000 | $ | 5,000,000 | ||||||||||
| U.S. Bancorp Investments, Inc. | $ | 3,500,000 | $ | 5,000,000 | $ | 6,500,000 | $ | 10,000,000 | $ | 5,000,000 | ||||||||||
| Total | $ | 350,000,000 | $ | 500,000,000 | $ | 650,000,000 | $ | 1,000,000,000 | $ | 500,000,000 | ||||||||||
The Underwriters agree to reimburse the Company for $1,832,500 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(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 third 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; and (iv) the tenth and eleventh paragraphs of text under the caption “Underwriting” in such preliminary prospectus, Time of Sale Prospectus and the Prospectus.
The undersigned are acting as the “Representative” under the Standard Provisions (the “Representatives”). The Representatives represent and warrant that they are duly authorized to execute and deliver this Terms Agreement on behalf of the several Underwriters named above.
The signature of any signatory to this Agreement may be manual or facsimile (including, for the avoidance of doubt, electronic).
The Underwritten Securities and the offering thereof shall have the following additional terms:
| Issuer: | PepsiCo, Inc. | ||||
| Trade Date: | February 13, 2023 | ||||
| Time of Sale: | 6:30 P.M. New York time on the Trade Date | ||||
| Settlement Date (T+2): | February 15, 2023 | ||||
| Closing Time: | 9:00 AM New York time on the Settlement Date | ||||
| Closing Location: | New York, New York | ||||
| Time of Sale Prospectus: | Base prospectus dated July 26, 2022, preliminary prospectus supplement dated February 13, 2023 and free writing prospectus dated February 13, 2023 | ||||
| Title of Securities: | Floating Rate Notes due 2026 | 4.550% Senior Notes due 2026 | 4.450% Senior Notes due 2028 | 4.450% Senior Notes due 2033 | 4.650% Senior Notes due 2053 |
| Aggregate Principal Amount Offered: | $350,000,000 | $500,000,000 | $650,000,000 | $1,000,000,000 | $500,000,000 |
| Maturity Date: | February 13, 2026 | February 13, 2026 | May 15, 2028 | February 15, 2033 | February 15, 2053 |
| Interest Payment Dates: | Quarterly in arrears on each February 13, May 13, August 13 and November 13, commencing May 13, 2023 | Semi-annually on each February 13 and August 13, commencing August 13, 2023 | Semi-annually on each May 15 and November 15, commencing November 15, 2023 | Semi-annually on each February 15 and August 15, commencing August 15, 2023 | Semi-annually on each February 15 and August 15, commencing August 15, 2023 |
| Benchmark Treasury: | — | 4.000% due February 15, 2026 | 3.500% due January 31, 2028 | 3.500% due February 15, 2033 | 4.000% due November 15, 2052 |
| Benchmark Treasury Yield: | — | 4.221% | 3.925% | 3.717% | 3.779% |
| Spread to Treasury: | — | +35 basis points | +55 basis points | +75 basis points | +87.5 basis points |
| Re-offer Yield: | — | 4.571% | 4.475% | 4.467% | 4.654% |
| Coupon: | Compounded SOFR plus 0.400%. The interest rate on the Floating Rate Notes due 2026 will in no event be lower than zero | 4.550% | 4.450% | 4.450% | 4.650% |
| Floating Rate Interest Calculation: | The amount of interest accrued and payable on the Floating Rate Notes due 2026 for each interest period will be calculated by the calculation agent and will be equal to the product of (i) the outstanding principal amount of the Floating Rate Notes due 2026 multiplied by (ii) the product of (a) the interest rate for the relevant interest period multiplied by (b) the quotient of the actual number of calendar days in the relevant Observation Period divided by 360. See “Description of Notes—Floating Rate Notes—Compounded SOFR” in the prospectus supplement | — | — | — | — |
| Compounded SOFR: | A compounded average of the daily Secured Overnight Financing Rate (“SOFR”) determined by reference to the SOFR Index for each quarterly interest period in accordance with the specific formula described under “Description of Notes—Floating Rate Notes—Compounded SOFR” in the prospectus supplement | — | — | — | — |
| Price to Public: | 100.000% | 99.942% | 99.866% | 99.864% | 99.936% |
| Optional Redemption: | — | Prior to January 13, 2026, make-whole call at Treasury Rate plus 10 basis points; par call at any time on or after January 13, 2026 | Prior to April 15, 2028, make-whole call at Treasury Rate plus 10 basis points; par call at any time on or after April 15, 2028 | Prior to November 15, 2032, make-whole call at Treasury Rate plus 15 basis points; par call at any time on or after November 15, 2032 | Prior to August 15, 2052, make-whole call at Treasury Rate plus 15 basis points; par call at any time on or after August 15, 2052 |
| Net Proceeds to PepsiCo (Before Expenses): | $349,212,500 | $498,585,000 | $646,854,000 | $994,140,000 | $495,305,000 |
| 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/360 | 30/360 | 30/360 | 30/360 | 30/360 |
| CUSIP / ISIN: | 713448 FP8 / US713448FP87 | 713448 FQ6 / US713448FQ60 | 713448 FR4 / US713448FR44 | 713448 FS2 / US713448FS27 | 713448 FT0 / US713448FT00 |
| Minimum Denomination: | $2,000 and integral multiples of $1,000 |
| Joint Book-Running Managers: | BofA Securities, Inc.
J.P. Morgan Securities LLC |
| Senior Co-Managers: | BNP Paribas Securities Corp.
Deutsche Bank Securities Inc. HSBC Securities (USA) Inc. BBVA Securities Inc. TD Securities (USA) LLC |
| Co-Managers: | Academy Securities, Inc.
ANZ Securities, Inc. Cabrera Capital Markets LLC CastleOak Securities, L.P. ING Financial Markets LLC PNC Capital Markets LLC Siebert Williams Shank & Co., LLC U.S. Bancorp Investments, Inc. |
| Address for Notices to the Representatives: | BofA Securities, Inc.
Citigroup Global Markets Inc.
J.P. Morgan Securities LLC |
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/ Ada Cheng | ||
| Name: | Ada Cheng | ||
| Title: | Senior Vice President, Finance and Treasurer | ||
CONFIRMED AND ACCEPTED, as of the date first above written:
BOFA SECURITIES, INC.
CITIGROUP GLOBAL MARKETS INC.
J.P. MORGAN SECURITIES LLC
as Representatives of the several Underwriters
| By: | BOFA SECURITIES, INC. | |||
| By: | /s/ Laurie Campbell | |||
| Name: | Laurie Campbell | |||
| Title: | Managing Director | |||
| By: | CITIGROUP GLOBAL MARKETS INC. | |||
| By: | /s/ Brian D. Bednarski | |||
| Name: | Brian D. Bednarski | |||
| Title: | Managing Director | |||
| By: | J.P. MORGAN SECURITIES LLC | |||
| By: | /s/ Robert Bottamedi | |||
| Name: | Robert Bottamedi | |||
| Title: | Executive Director | |||
Schedule I
Time of Sale Prospectus:
| 1. | Preliminary Prospectus dated February 13, 2023 (including the Base Prospectus dated July 26, 2022) |
| 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 February 13, 2023 to be filed by the Company pursuant to Rule 433 under the Securities Act setting forth certain terms of the Underwritten Securities |
