Debt

Debt Obligations



	As of
	December 31, 2017			December 31, 2016
	(In millions)
Senior notes:
CAD 500 million 3.95% Series A notes due 2017	$	—		$	372.0
CAD 400 million 2.25% notes due 2018⁽¹⁾	318.2			297.6
CAD 500 million 2.75% notes due 2020⁽¹⁾	397.7			372.0
CAD 500 million 2.84% notes due 2023⁽²⁾	397.7			372.0
CAD 500 million 3.44% notes due 2026⁽²⁾	397.7			372.0
$300 million 2.0% notes due 2017⁽³⁾	—			300.2
$500 million 1.45% notes due 2019⁽²⁾	500.0			500.0
$500 million 1.90% notes due 2019⁽⁴⁾	498.5			—
$500 million 2.25% notes due 2020⁽⁴⁾	498.2			—
$1.0 billion 2.10% notes due 2021⁽²⁾	1,000.0			1,000.0
$500 million 3.5% notes due 2022⁽³⁾	512.2			515.0
$2.0 billion 3.0% notes due 2026⁽²⁾	2,000.0			2,000.0
$1.1 billion 5.0% notes due 2042⁽³⁾	1,100.0			1,100.0
$1.8 billion 4.2% notes due 2046⁽²⁾	1,800.0			1,800.0
EUR 500 million notes due 2019⁽⁴⁾	600.3			—
EUR 800 million 1.25% notes due 2024⁽²⁾	960.4			841.4
Term loans⁽⁵⁾	—			2,300.0
Other long-term debt	22.1			2.2
Less: unamortized debt discounts and debt issuance costs	(75.9		)	(85.0		)
Total long-term debt (including current portion)	10,927.1			12,059.4
Less: current portion of long-term debt	(328.4		)	(671.7		)
Total long-term debt	$	10,598.7		$	11,387.7

Short-term borrowings:
Commercial paper program⁽⁶⁾	$	379.0		$	—
Other short-term borrowings⁽⁷⁾	7.4			13.1
Current portion of long-term debt	328.4			671.7
Current portion of long-term debt and short-term borrowings	$	714.8		$	684.8

(1)

On September 18, 2015, Molson Coors International, L.P., a Delaware limited partnership and wholly-owned subsidiary of MCBC ("Molson Coors International L.P."), issued CAD 500 million 2.75% notes due September 18, 2020 ("CAD 500 million notes"), and CAD 400 million 2.25% notes due September 18, 2018 ("CAD 400 million notes", and together with the CAD 500 million notes, the "2015 Notes"). Prior to issuing the 2015 Notes, we entered into forward starting interest rate swap agreements to hedge the interest rate volatility on CAD 600 million of the 2015 Notes beginning in the second quarter of 2014. At the time of the issuance of the 2015 Notes, the government of Canada bond rates were trading at a yield lower than that locked in by the interest rate swaps, resulting in an aggregate realized loss of CAD 39.2 million ($29.5 million at settlement), which was recorded in other comprehensive income. A portion of this loss is being amortized into interest expense over the 5-year and 3-year terms of the respective 2015 Notes and will increase our effective cost of borrowing compared to the stated coupon rates by 0.65% on the CAD 500 million notes and 0.16% on the CAD 400 million notes. The remaining portion of the loss will be amortized on future debt issuances covering the full 10-year term of the interest rate swap agreements. The cash payment associated with the settlement of the forward starting interest rate swap agreements was recorded as an operating outflow within the other assets and liabilities line item on the consolidated statement of cash flows. See Note 17, "Derivative Instruments and Hedging Activities" for further details on the forward starting interest rate swaps.

(2)

On July 7, 2016, MCBC issued approximately $5.3 billion senior notes with portions maturing from July 15, 2019, through July 15, 2046 ("2016 USD Notes"), and EUR 800.0 million senior notes maturing July 15, 2024 ("2016 EUR Notes"), and Molson Coors International L.P., completed a private placement of CAD 1.0 billion senior notes maturing July 15, 2023, and July 15, 2026 ("2016 CAD Notes"), in order to partially fund the financing of the Acquisition (2016 USD Notes, 2016 EUR Notes and 2016 CAD notes, collectively, the "2016 Notes"). These issuances resulted in total proceeds of approximately $6.9 billion, net of underwriting fees and discounts of $36.5 million and $17.7 million, respectively. Total debt issuance costs capitalized in connection with these notes including underwriting fees, discounts and other financing related costs, were approximately $65 million and are being amortized over the respective terms of the 2016 Notes. The 2016 Notes began accruing interest upon issuance, with semi-annual payments due on the 2016 USD Notes and 2016 CAD Notes in January and July beginning in 2017, and annual interest payments due on the 2016 EUR Notes in July beginning in 2017.

Prior to issuing the 2016 EUR Notes and the 2016 CAD Notes, we entered into foreign currency forward agreements to economically hedge the foreign currency exposure of a portion of the respective notes, which were subsequently settled on July 7, 2016, concurrent with the issuance of the 2016 Notes. Additionally, upon issuance we designated the EUR Notes as a net investment hedge of our Europe business. See Note 17, "Derivative Instruments and Hedging Activities" for further details.

In order to maximize the yield on the cash received from the issuance of the 2016 Notes and the February 3, 2016, equity issuance, while maintaining the ability to readily access these funds, MCBC strategically invested the proceeds in various fixed rate deposit and money market accounts with terms of three months or less in anticipation of the Acquisition. Accordingly, we recorded interest income of $19.0 million for the year ended December 31, 2016, within interest income (expense). The proceeds from our 2016 Notes and February 3, 2016, equity issuance were used to partially fund the Acquisition on October 11, 2016.

(3)

On May 3, 2012, we issued approximately $1.9 billion of senior notes with portions maturing in 2017, 2022 and 2042. The 2017 senior notes were issued in an initial aggregate principal amount of $300 million at 2.0% interest and matured on May 1, 2017 ("$300 million notes"). The 2022 senior notes were issued in an initial aggregate principal amount of $500 million at 3.5% interest and will mature on May 1, 2022 ("$500 million notes"). The 2042 senior notes were issued in an initial aggregate principal amount of $1.1 billion at 5.0% interest and will mature on May 1, 2042. The issuance resulted in total proceeds, before expenses, of approximately $1.9 billion, net of underwriting fees and discounts of $14.7 million and $4.6 million, respectively. Total debt issuance costs capitalized in connection with these senior notes, including the underwriting fees and discounts, were approximately $18.0 million and are being amortized over the term of the notes. During the second quarter of 2017, we repaid our $300 million notes using commercial paper.

In the first quarter of 2015, we entered into interest rate swaps to economically convert our fixed rate $300 million notes to floating rate debt consistent with the interest rate swaps on our $500 million notes entered into during 2014. As a result of these hedge programs, the changes in fair value of the interest rate swaps and the offsetting changes in the fair value of our $300 million and $500 million notes attributable to the benchmark interest rate were recorded as unrealized positions in interest expense in our consolidated statement of operations. As a result of fair value hedge accounting, the carrying value of the $300 million and $500 million notes include an adjustment for the change in fair value. During the fourth quarter of 2015, we settled these interest rate swaps, at which time we ceased adjusting the carrying value of the related $300 million and $500 million notes for the fair value movements of these swaps. At the time of termination, cumulative adjustments to the carrying value of the notes were $0.7 million and $18.1 million representing the cash inflows upon termination related to the $300 million and $500 million notes, respectively. Beginning in the fourth quarter of 2015, we began amortizing these cumulative adjustments to interest expense over the remaining term of each respective note and will accordingly decrease the annual effective interest rate for the $300 million and $500 million notes for the remaining term of the notes by 0.16% and 0.56%, respectively. The impact of these swaps including amortization resulted in an effective interest rate on the $300 million and $500 million notes of 0.95% and 1.57%, respectively, for 2015. The fair value adjustments and subsequent amortization have been excluded from the aggregate principal debt maturities table presented below.

In the first quarter of 2015, we also entered into a cross currency swap with a total notional of EUR 265 million ($300 million upon execution) in order to hedge a portion of the foreign currency translational impacts of our European investment. As a result of this cross currency swap and the above mentioned interest rate swaps, we economically converted the $300 million and associated interest to a floating rate EUR denomination. During the fourth quarter of 2015, we voluntarily cash settled the EUR 265 million notional cross currency swap associated with the $300 million notes simultaneously with the voluntary settlement of the interest rate swaps discussed previously resulting in a separate cash inflow of $16.0 million. See Note 17, "Derivative Instruments and Hedging Activities" for further details.

(4)

On March 15, 2017, MCBC issued approximately $1.5 billion of senior notes, consisting of $500.0 million 1.90% senior notes due March 15, 2019, and $500.0 million 2.25% senior notes due March 15, 2020 (collectively, the "2017 USD Notes") and EUR 500.0 million floating rate senior notes due March 15, 2019 ("2017 EUR Notes") (2017 USD Notes and 2017 EUR Notes, collectively, the "2017 Notes"). We bear quarterly interest on the 2017 EUR Notes at the rate of 0.35% plus three-month EURIBOR. These issuances resulted in total proceeds of approximately $1.5 billion, net of underwriting fees and discounts of $3.1 million and $0.7 million, respectively. Total debt issuance costs capitalized in connection with these notes, including underwriting fees, discounts and other financing related costs, were $6.1 million and are being amortized over the respective terms of the 2017 Notes. The 2017 Notes began accruing interest upon issuance, with quarterly payments due on the 2017 EUR Notes beginning June 15, 2017, and semi-annual payments due on the 2017 USD Notes beginning September 15, 2017. The proceeds from our 2017 Notes were used to repay our term loans, as further described below.

In the first quarter of 2017, we entered into interest rate swaps to economically convert our fixed rate 2017 USD Notes to floating rate debt. As a result of these hedge programs, the carrying value of the $500.0 million 1.90% notes and $500.0 million 2.25% notes were adjusted for fair value movements attributable to the benchmark interest rate. During the fourth quarter of 2017, we settled these interest rate swaps, at which time we ceased adjusting the carrying value of the 2017 USD Notes for the fair value of these swaps. At the time of termination, cumulative adjustments to the carrying value of the notes were losses of $1.6 million on the $500.0 million 1.90% notes and $1.9 million on the $500.0 million 2.25% notes. Beginning in the fourth quarter of 2017, we began amortizing these cumulative adjustments to interest expense over the remaining term of each respective note and will accordingly increase the annual effective interest rate for the $500.0 million 1.90% notes and $500.0 million 2.25% notes for the remaining term of the notes by 0.24% and 0.17%, respectively. The impact of these swaps including amortization resulted in an effective interest rate on the $500.0 million 1.90% notes and $500.0 million 2.25% notes of 1.65% and 1.83%, respectively, for 2017. The fair value adjustments and subsequent amortization have been excluded from the aggregate principal debt maturities table presented below.

Prior to issuing the 2017 EUR Notes, we entered into foreign currency forward agreements to economically hedge the foreign currency exposure of a portion of the respective notes, which were subsequently settled on March 15, 2017, concurrent with the issuance of the 2017 EUR Notes. Additionally, upon issuance we designated the 2017 EUR Notes as a net investment hedge of our Europe business. See Note 17, "Derivative Instruments and Hedging Activities" for further details.

(5)

In anticipation of the Acquisition, we entered into a term loan agreement during the fourth quarter of 2015, by and among the Company, the lenders party thereto, and Citibank, N.A., as Administrative Agent. The term loan agreement provided for total term loan commitments of $1.5 billion in a 3-year tranche and $1.5 billion in a 5-year tranche, for an aggregate principal amount of $3.0 billion. On October 11, 2016, in connection with the closing of the Acquisition, we borrowed $1.0 billion under the 3-year tranche and $1.5 billion under the 5-year tranche, for an aggregate principal amount of $2.5 billion. The proceeds were used to partially fund the Acquisition. Total debt issuance costs capitalized in connection with these term loans were $8.7 million and were amortized to interest expense over each tranche's respective terms. The term loans had monthly interest at the rate of 1.50% plus one-month LIBOR. The term loans were fully repaid as of July 19, 2017.

(6)

As of December 31, 2017, we had total outstanding borrowings under our commercial paper program of $379.0 million at a weighted-average effective interest rate and tenor of 1.84% and 45 days, respectively. There were no outstanding borrowings under our commercial paper program as of December 31, 2016. During the third quarter of 2017, we increased the size of our commercial paper program to a maximum of $1.5 billion. We used proceeds from the commercial paper to make repayments of our notes upon maturity as well as fund working capital needs.


(7)	As of December 31, 2017, we had $1.2 million in bank overdrafts and $37.8 million in bank cash related to our cross-border, cross-currency cash pool for a net positive position of $36.6 million. As of December 31, 2016, we had $2.6 million in bank overdrafts and $18.0 million in bank cash related to our cross-border, cross-currency cash pool for a net positive position of $15.4 million.

We had total outstanding borrowings of $3.2 million and $7.0 million under our two JPY overdraft facilities as of December 31, 2017, and December 31, 2016, respectively. In addition, we have GBP and CAD lines of credit under which we had no outstanding borrowings as of December 31, 2017, or December 31, 2016. A summary of our short-term facility availability is presented below. See Note 19, "Commitments and Contingencies" for further discussion related to letters of credit.

•JPY 900 million overdraft facility at Japan base rate plus 0.45%

•JPY 500 million overdraft facility at Japan base rate plus 0.35%

•CAD 30 million line of credit at USD Prime or CAD Prime depending on the borrowing currency

•GBP 20 million line of credit consisting of a GBP 10 million overdraft facility at GBP LIBOR plus 1.5%


•	GBP 10 million uncommitted money market facility

Debt Fair Value Measurements