| Loans and borrowings | 31 December 2012 | 31 December 2011 |
|---|---|---|
| Short-term liabilities | 275,608 | 246,778 |
| Long-term liabilities | 592,003 | 958,407 |
| Total | 867,611 | 1,205,185 |
Change in loans and borrowings liabilities
for the year ended
| 31 December 2012 | 31 December 2011 | |
|---|---|---|
| Loans and borrowings as at 1 January | 1,205,185 | - |
| Term loans received | - | 2,800,000 |
| Loans and borrowings assumed through acquisition of entities | 96,818 | 19,978 |
| Repayment of capital | (453,324) | (1,538,844) |
| Repayment of interest and commissions | (90,828) | (192,983) |
| Interest accrued | 109,760 | 117,034 |
| Loans and borrowings as at 31 December | 867,611 | 1,205,185 |
On 29 August 2012 the Group has partly pre-paid a principal of its Term Facility Loan in the amount of PLN 200,000. The repayment was executed using the cash generated from operations.
On 27 November 2012 the Company’s related entity, Telewizja Polsat Holdings Sp. z o.o., acceded to the Senior Facility Agreement as the guarantor.
Conclusion of a Senior Facilities Agreement and Bridge Facility Agreement
In connection with the acquisition of Telewizja Polsat S.A., on 31 March 2011 the Group, concluded a Senior Facilities Agreement with a syndicate of Polish and international banks led by: Citibank, N.A., London Branch, Bank Handlowy w Warszawie S.A., Crédit Agricole CIB, The Royal Bank of Scotland plc. (‘the Bookrunners‘).
The Senior Facilities Agreement provided for a term facility loan of up to PLN 1,400,000 and a revolving facility loan of up to PLN 200,000. The interest rate applicable for both, the term facility and revolving facility loan, was agreed as variable rates comprising WIBOR, for the relevant interest periods, and the applicable margin. The term facility loan will be repaid in quarterly instalments in varying amounts commencing 30 June 2011. Both facilities expire on 31 December 2015. As 31 December 2012 the revolving facility was not used.
Summary of significant provisions of the agreements
Mandatory prepayments
The facilities will be cancelled and the outstanding balance, together with accrued interest, shall become immediately due and payable upon loss of control by Mr Zygmunt Solorz-Żak (or party related with him) over the Company or loss of control by the Company over Telewizja Polsat. The facilities shall also become immediately due upon sale of all or substantially all of the Group or the assets of the Group.
Mandatory prepayments are also required in the following amounts:
- in the amount equal to 65% of excess cashflow for any financial year of the Company or equal to 25% if total net debt to EBITDA ratio of the Company is less than 2.0 for the last day of each of the last two Financial Quarters,
- in the amount of disposal proceeds for transaction exceeding PLN 10 million (not in thousand) in respect of any one disposal or PLN 40 million (not in thousand) in aggregate at any time before the facilities are repaid in full.
- in the amount of debt proceeds or equity proceeds if total net debt to EBITDA ratio of the Company exceeds 2.0 for the last day of each of the last two Financial Quarters.
In addition, voluntary High Yield Notes (i.e. Senior Notes) repayment is allowable only if accompanied by a repayment of term and revolving facilities.
Financial covenants
The loan agreement imposed on the Group the obligation to maintain financial ratios at a certain level. The Debt Service Cover shall be at least 1.5 for a given Period. The Interest Cover shall be at least 3.0 for a given Period. The Total leverage shall not exceed 3.5 for a given Period. Financial covenants shall be tested on each quarter date and shall be reported on by an auditor on annual basis. Financial covenants were maintained in years 2011 and 2012.
Further, restrictions which are imposed on the Group include the following:
- restrictions relating to mergers, acquisitions, joint venture transactions
- restrictions related to disposal of assets and substantial change of business
- restrictions related to incurring additional financial indebtedness and share capital issue
- restrictions relating to cash out transactions (inter alia dividend and other distribution payments, repayment of principal and interest of financial indebtedness, management/advisory fee payments, advance or similar kind of payment to related parties).
Additionally, the Group inter alia has the following obligations:
- provide the banks with any material documents and information concerning the financial standing of the Group,
- hedge against interest rate and foreign exchange rate fluctuations in respect of the amounts outstanding under the term facility and notes payable
- all bank accounts shall be opened and maintained with the lending banks
- use, for the purpose of financial statements’ audit, only the services of the auditors specified in the agreement or the services of other auditors if approved by the banks.
Agreement with Bank Pekao S.A.
On 19 August 2011 the Group’s subsidiary signed an agreement with Bank Pekao S.A. defining rights and obligations of the parties should the subsidiary order the bank to issue a guarantee or a letter of credit. Bank’s total commitment regarding the issued guarantees and letters of credit may not exceed PLN 4,000. The facility was secured by the subsidiary’s declaration on submission to enforcement of up to PLN 6,000.
