Mazda 2016 Annual Report Download - page 69

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19 SIGNIFICANT SUBSEQUENT EVENTS
On July 20, 2016, the Company implemented the funding by new subordinated loan
(the “Subordinated Loan”) and made an early repayment of the existing subordinated loan
(the “Existing Subordinated Loan”).
1. Overview of the Subordinated Loan
The detailed conditions and terms of the Subordinated Loan are as follows.
(i) Amount borrowed ¥70 billion ($619 million)
(ii) Use of proceeds Applied to the repayment of the Existing Subordinated Loan
(iii) Drawdown date July 20, 2016
(iv) Due date July 20, 2076
(v) Early repayment
The Company may make an early repayment of all or some of the principal of the
Subordinated Loan on any interest payment date on or after July 20, 2021 unless any of the
subordination events has occurred and continues. Furthermore, unless any of such subordi-
nation events has occurred and continues, the Company may also make an early repayment
of all or some of the principal of the Subordinated Loan only on any interest payment date if:
(a) (i) the interest on the Subordinated Loan becomes treated materially adversely from the
Company’s perspective for the purpose of taxation, which is unavoidable despite the
Company’s reasonable efforts or (ii) the Company becomes liable for any additional payment
obligations relating to taxes or other public charges; or
(b) the ratings institution decides that it will treat the Subordinated Loan as having equity
credit attributes lower than the Subordinated Loan is expected to have at the time of execution
of the Agreement on the Subordinated Loan (the “Agreement”).
Moreover, unless any of such subordination events has occurred and continues, if majority
lenders (two-thirds or more of the principal) and the agent give approval, the Company may
also make an early repayment of all or some of the principal of individual loan to all or some
of the lenders.
(vi) Replacement restrictions
When making an early repayment of the Subordinated Loan, the Company intends to raise
the funds, within the 12-month period before the date on which it will make that early repay-
ment, by issuance of common stock or subordinated loans, etc. that have been approved by
the ratings institution as having equity credit attributes, so that the amount that has been
approved as having equity credit attributes is equal to or greater than the evaluated capital of
the principal amount to be repaid; provided, however, if both of the following requirements are
met at an early repayment, the financing in accordance with this clause may not be made:
(a) The Company’s total amount of equity calculated based on the latest consolidated balance
sheet disclosed as of the announcement of early repayment, either at the end of the each
fiscal year or at the end of the second quarter, exceeds ¥1,024 billion ($9,062 million); and
(b) The Company’s equity ratio calculated based on the latest consolidated balance sheet
disclosed as of the announcement of early repayment, either at the end of each fiscal year or
at the end of the second quarter, exceeds 39.1%.
(vii) Interest payment
Excluding the cases where dividends are paid on common stock, the Company may, at its
discretion, defer all or some of the payment of interest on the Subordinated Loan.
(viii) Subordination
If liquidation proceedings, bankruptcy proceedings, reorganization proceedings or rehabilitation
proceedings, or any proceedings similar to any of those under the law of any nation other than
Japan are commenced against the Company and such proceedings continue, the right to request
payment of the receivables under the Agreement will be effective on the condition precedent
that all receivables other than the receivables whose subordination and the like are similar in
substance to those of the Subordinated Loan are paid in full or otherwise satisfied in full.
No term of the Agreement may be changed to the disadvantage of any creditors other than
the creditors of the subordinated receivables in any respect whatsoever.
Notes to Consolidated Financial Statements
MAZDA ANNUAL REPORT 2016
Financial Section
Message from
Management
Review of Operations
Drivers of Value Creation
Foundations Underpinning
Sustainable Growth
Contents