20-F: Embotelladora Andina Details Bond Terms and Extends Coca-Cola Bottler Agreement

Embotelladora Andina outlines the terms and conditions for its CHF 170 million bonds and announces a one-year extension of its bottler agreement with The Coca-Cola Company for the Chilean territory.

Summary

• Embotelladora Andina S.A. has outlined the terms and conditions of its bonds, with an initial aggregate principal amount of CHF 170,000,000.
• The bonds are divided into denominations of CHF 5,000 each.
• The bonds bear interest from September 20, 2023, at a rate of 2.7175% per annum, payable annually on September 20, commencing in 2024 and ending on September 20, 2028.
• The issuer may redeem the bonds early under certain conditions, including if 85% or more of the principal has been redeemed or if changes in Chilean law result in withholding taxes exceeding 4.0%.
• The document also announces the extension of the bottler agreement with The Coca-Cola Company for the Chilean territory until December 31, 2024.
• The terms of the bonds are governed by Swiss law, with Zurich as the exclusive place of jurisdiction.

Sentiment

Score: 7

Explanation: The document is neutral to positive. It outlines standard financial terms and confirms a key business relationship. The bond issuance suggests financial health and access to capital markets, while the bottler agreement extension provides stability.

Positives

• The bond issuance provides Embotelladora Andina with a significant amount of capital (CHF 170,000,000).
• The fixed interest rate on the bonds provides predictability for the issuer.
• The extension of the bottler agreement with The Coca-Cola Company ensures continued operations in the Chilean territory.

Negatives

• The issuer may be obligated to pay additional amounts to bondholders to cover taxes, duties, assessments or governmental charges.
• The issuer is subject to a negative pledge, restricting its ability to create security interests on its assets.
• The bondholders are subject to Swiss law, which may be unfamiliar to some investors.

Risks

• Changes in Chilean law could trigger early redemption if withholding taxes exceed 4.0%.
• The negative pledge restricts the issuer's ability to secure other indebtedness.
• The Bondholders Representative has the right to serve a written notice of default (Default Notice), such notice having the effect that the Bonds shall become immediately due and payable at par plus accrued and unpaid interest, if any, on the day the Default Notice is given.

Future Outlook

The issuer reserves the right to reopen the bond issue and increase the aggregate principal amount at any time. The issuer will use its reasonable efforts to procure that the Bonds are listed on SIX Swiss Exchange and to maintain such listing during the whole life of the Bonds.

Industry Context

This announcement is typical for companies in the beverage industry, which often rely on debt financing for capital projects and maintain close relationships with major brand owners like The Coca-Cola Company. The bond issuance provides capital, while the bottler agreement ensures a continued supply of key products.

Comparison to Industry Standards

• Coca-Cola bottlers globally often use similar financing strategies, such as bond issuances, to fund operations and expansions.
• Comparable companies like Coca-Cola FEMSA (Mexico) and Arca Continental (Mexico) also maintain long-term relationships with The Coca-Cola Company through bottler agreements.
• The interest rate of 2.7175% on the CHF bonds appears competitive in the current market, but a full assessment would require comparing it to similar issuances by companies with comparable credit ratings at the time of issuance.
• The early redemption clauses are standard in bond agreements, providing flexibility for the issuer in case of adverse regulatory or tax changes.

Stakeholder Impact

• Shareholders: The bond issuance may impact the company's financial leverage and profitability.
• Customers: The bottler agreement extension ensures continued availability of Coca-Cola products.
• Employees: The continued operations in Chile provide job security.
• Creditors: The bond issuance increases the company's debt obligations.

Next Steps

• The issuer will proceed with the bond issuance according to the outlined terms.
• The issuer will continue to operate under the extended bottler agreement with The Coca-Cola Company in the Chilean territory.
• The Issuer will use its reasonable efforts to procure that the Bonds are listed on SIX Swiss Exchange and to maintain such listing during the whole life of the Bonds.

Key Dates

Keywords

Bonds, Embotelladora Andina, Coca-Cola, Bottler Agreement, Swiss Francs, Redemption, Interest Rate, Chile