Lenovo 2009 Annual Report Download - page 133

2008/09 Annual Report Lenovo Group Limited
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29 Non-current liabilities (continued)
(a) On February 5, 2004, the Group entered into an agreement with the International Olympic Committee and the United
States Olympic Committee regarding participation in The Olympic Partner Program. Pursuant to the agreement, the
Group has to pay a total amount of US$65,000,000 in cash and value in kind to obtain marketing rights which include the
use of Olympic intellectual property rights and exclusive worldwide marketing opportunities in its products, technology
and service categories from January 1, 2005 to December 31, 2008.
(b) US$200 million of the 5-year revolving term loan with syndicated banks was reclassified to current liability according to
the repayment schedule. The substantial loss incurred in the fourth quarter of the year ended March 31, 2009 triggered a
breach of certain financial covenants, whereby the remaining balance of the loan of US$200 million was also reclassified
as current liability. The Group has obtained the consent from the syndicated banks the waiver of strict compliance with
those financial covenants and will enter into a revised loan agreement.
The Group has a 5-year fixed rate loan facility with a bank in China expiring in March 2011. At March 31, 2009, the
outstanding loan balance was US$65 million of which US$35 million is payable in 2009/10, and a final repayment of
US$30 million in 2010/11.
The Group also obtained a new US$300 million 3-year term loan facility with a bank in China in March 2009. This facility
was utilized to the extent of US$200 million at March 31, 2009.
The carrying amounts of non-current liabilities approximate their fair value as the impact of discounting is not significant.
The balance of the 5-year revolving term loan of US$400 million and the current portion of the 5-year fixed rate loan of
US$35 million are classified as current portion of non-current liabilities (Note 29(e)).
(c) This represents deferred share-based compensation in relation to replacement shares granted to legacy IBM employees as
compensation of IBM vested stock options forfeited by them, and were treated as assumed liabilities of the acquisition.
(d) On May 17, 2005, the Company issued 2,730,000 convertible preferred shares at the stated value of HK$1,000 per share
and unlisted warrants to subscribe for 237,417,474 shares for an aggregate cash consideration of approximately US$350
million. The convertible preferred shares bear a fixed cumulative preferential cash dividend, payable quarterly, at the rate
of 4.5 percent per annum on the issue price of each convertible preferred share. The convertible preferred shares are
redeemable, in whole or in part, at a price equal to the issue price together with accrued and unpaid dividends at the option
of the Company or the convertible preferred shareholders at any time after the maturity date at May 17, 2012.
Movements of the liability component of the convertible preferred shares during the year are as follows:
Group and Company
2009 2008
US$’000 US$’000
At April 1 211,181 317,495
Exchange adjustment 918 1,720
Interest charged 14,115 18,700
Interest paid (10,240) (13,500)
Conversion to voting ordinary shares – (113,234)
At March 31 215,974 211,181
(e) The current portion of non-current liabilities are as follow:
Group Company
2009 2008 2009 2008
US$’000 US$’000 US$’000 US$’000
Marketing rights – 11,443 – –
Electronic waste disposal levy 2,359 2,138 – –
Interest-bearing bank loans 435,000 35,000 435,000 35,000
437,359 48,581 435,000 35,000