Tobacco company Philip Morris International (PMI) announced today that its inaugural agreement under its new Business Transformation-Linked Financing Framework, signing a $2.5 billion credit facility with debt costs tied to the company’s progress on achieving its “smoke-free transformation” goals.
The new credit facility agreement follows the publication of the Framework last month, which the company said demonstrated its commitment to “drive the end of cigarette smoking as fast as possible,” in accordance with Philip Morris’ landmark vision, launched in 2016.
Emmanuel Babeau, Chief Financial Officer at Philip Morris, said:
“We are pleased with the broad engagement and support of lenders for our first business transformation-linked financing instrument. This credit facility further reinforces our industry-leading transformation and our commitment to accelerate the end of smoking and to use our strong capabilities to develop products that go beyond nicotine and have a net positive impact on society.”
The facility includes business transformation-linked pricing adjustments, with reductions or increases in both the interest rate and commitment fee if PMI achieves, or fails to achieve, certain specified targets. The Framework specifies two Sustainability Performance Targets (SPTs), based on 2025 goals recently announced by the company. These include reaching more than 50% of revenues from smoke-free products (compared to 23.8% in 2020), and making smoke-free products available for sale in 100 markets (compared to 64 at the end of 2020) by 2025.
Jennifer Motles, Chief Sustainability Officer at Philip Morris, said:
“Investors, lenders and other stakeholders can play an important role in driving change by encouraging and supporting companies that are committed to transform and improve their impact on society. We look forward to continued engagement with our stakeholders in order to further accelerate our smoke-free transformation and set an example for other companies, both inside and outside our industry.”