Constellation Brands has added $300 million of standby borrowing capacity, entering into a delayed-draw term loan credit agreement on September 18, 2026 with Manufacturers and Traders Trust Company as administrative agent and a group of other lenders. The company disclosed the agreement in a Form 8-K filed with the Securities and Exchange Commission the same day.
The facility makes up to $300 million available in as many as two draws. Commitments expire on the earliest of full drawdown, the second funding date, or June 18, 2027. Any funded term loans mature two years after the initial borrowing date.
Pricing and covenants
Borrowings bear interest at the company's option at either Term SOFR or a base rate, plus a margin tied to Constellation's credit ratings from S&P and Moody's: 0.700 to 1.100 percent per annum over Term SOFR, or 0.000 to 0.100 percent over the base rate. Unused commitments carry a ticking fee of 0.075 percent per annum beginning 30 days after the effective date.
The agreement's financial covenants mirror the company's existing revolving credit facility: a minimum consolidated interest coverage ratio of 2.50 to 1.00 each quarter and a maximum consolidated net leverage ratio of 4.00 to 1.00, stepping up to 4.50 to 1.00 for four fiscal quarters following a material acquisition, defined as one exceeding $1 billion. Net leverage is calculated net of up to $750 million of unrestricted cash and cash equivalents. The filing was signed by Garth Hankinson, executive vice president and chief financial officer.
Use of proceeds
Constellation said that if it draws on the facility, it intends to use the proceeds for general corporate purposes, including repayment of indebtedness. The structure, a delayed draw rather than an immediate funded loan, gives the beverage maker optionality: committed capacity on the shelf, drawn only if needed, with a modest ticking fee as the carrying cost.
For wine and beverage executives watching credit conditions, the deal is a useful marker. An investment-grade issuer can still lock in committed bank capacity on covenant terms consistent with its revolver, with pricing grids that reward stronger ratings. The step-up provision for large acquisitions also signals that Constellation is keeping its balance sheet positioned for deals even in a soft demand environment. The facility is modest relative to the company's scale, which reads as routine liquidity management rather than a strategic pivot, but in a year when smaller wine companies face tighter lending, the contrast is instructive.